Linkedin-in
Twitter Linkedin-in

QUICK
LINKS

SA REIT

Growthpoint’s shines with four prestigious green building awards 

by

Growthpoint’s property portfolio shines with four prestigious green building awards 

Growthpoint Properties (JSE: GRT), the leading real estate investment trust, has been honoured with four prestigious awards for environmentally innovative initiatives at its buildings by the 2024 Green Building Council of South Africa (GBCSA) Leadership Awards. These accolades recognise Growthpoint’s unwavering commitment to environmental sustainability, pioneering work in green building practices and collaboration with leading lights who, together, are driving a greener, more sustainable South Africa.

The 2024 GBCSA Leadership Awards are presented to those who have demonstrated an unwavering commitment to the goal of a climate positive future and acknowledge excellence in green building initiatives, which includes energy efficiency, water conservation, indoor environmental quality, transport, materials, land-use ecology, management, and innovation.

“We are incredibly proud of these prestigious GBCSA awards,” says Engelbert Binedell, Growthpoint’s Chief Operations Officer. “These honours reflect the valuable contributions of our tenants, accredited green building professionals, business partners and the team at Growthpoint. They underscore our dedication to creating sustainable, environmentally responsible properties that benefit our stakeholders, and especially our tenants and the communities we serve.”

The four awards for certified green building excellence at Growthpoint properties include:

Best Quality Submission – Existing Building Performance: Recognising excellent performance in Green Star existing building ratings

  • Joint winner: Woodmead Estate, which holds a 4-Star Green Building Performance certification
  • GBCSA Accredited Professional: Mary-Anne Fechter, Zutari

Highest Rated Building (Existing Building Performance): Honouring the highest-rated building in Green Star existing building ratings

  • Winner: Serra Services, Meadowbrook Estate, boasting a 6-Star Green Star Building Performance certification
  • GBCSA Accredited Professional: Danikay Taylor, Imbue Sustainability

Best Quality Submission – Asset Rating Design: Recognising excellent quality in Green Star design tools

  • Winner: The Anglo American fit-out at 144 Oxford, certified 6-Star Green Star Interiors
  • Accredited Professional: Yovka Raytcheva-Schaap, Zutari

Highest-Rated Building – Asset Rating Design: Honouring the highest-rated building in Green Star design tools

  • Winner: The Anglo American fit-out at 144 Oxford, 6-Star Green Star Interiors
  • Accredited Professional: Yovka Raytcheva-Schaap, Zutari

“These awards demonstrate our ongoing commitment to developing, owning and managing properties that minimise environmental impact while providing healthy, productive workspaces and working with others to help address global and local climate challenges,” adds Binedell. “We are dedicated to continuing our leadership in green building practices and contributing to a more sustainable future.”

Growthpoint’s goal is to be carbon neutral by 2050. Moving closer to its ESG (Environmental, Social, and Governance) targets, its progress includes 123 current green building certifications for its properties, as well as securing access to a rapidly growing reliable mix of renewable energy sources – electricity from water, on-site and remote solar, and wind – for tenants to access through its e-co2 benefit scheme, being the first of its kind in South Africa. Thanks to a PPA with Etana Energy, Growthpoint will begin wheeling 195 GWh/y of renewable energy to select buildings starting from July 2025.

Stor-Age grows it portfolio and continues to deliver

by

STOR-AGE GROWS ITS PORTFOLIO TO 107 PROPERTIES AND CONTINUES TO DELIVER 

JSE REIT Stor-Age, South Africa’s leading and largest self storage property fund, maintained its resilient financial performance for the six months to September 2024, delivering growth in its distributable income per share of 3.5%. On the back of another excellent operational performance at the property level, Stor-Age continued its track record of consistent earnings growth. The Company continued executing its strategic growth strategy, adding a further 10 properties to the portfolio over the past 12 months, taking the total number of properties to 107.

Stor-Age CEO Gavin Lucas commented, “Stor-Age has once again delivered an impressive financial and operational performance over the past six months. We continued to expand our portfolio, opening eight properties during the period and increasing the combined value of the portfolio, including properties managed in our JV partnerships, to R17.4 billion. In the nine year period since listing on the JSE in November 2015, we have grown our portfolio by 83 properties and outperformed the SA Property Yield Index, or SAPY, by 150%.”

The South African portfolio continued to outperform, with rental income and net property operating income increasing by 10.8% and 12.0% respectively compared to the prior year. Average occupancy and rental rates increased by 2.4% and 8.2% respectively, with occupancy in the same-store portfolio of owned properties growing by 8 900m² year-on-year.

After a challenging FY24 in the UK, Stor-Age delivered an equally pleasing set of results for the period. Rental income increased by 6.8%, with average occupancy and rental rates up 4.3% and 2.4% year-on-year respectively. Occupancy in the owned portfolio increased by 3 300m² year-on-year and net property operating income was up 7.4% compared to the prior year.

Stor-Age has a long and successful track record of acquiring, developing and managing self storage properties in prime locations which have delivered high occupancy and rental rate growth. Over the past 12 months, the Company has opened 10 new properties across both markets. This included five new developments completed in JV partnerships (two in SA and three in the UK), four properties added to the third-party management platform in the UK and the acquisition of Extra Attic in South Africa in September 2024.

Comments Lucas, “We continue to work with our JV partners to assess future acquisition, development and redevelopment opportunities. These partnerships are a key focus for the Group as we seek to source additional capital and development opportunities to deliver mutually beneficial outcomes for both Stor-Age and our partners. We remain confident that the long-term return profile on invested capital through our JV partnerships will be value-accretive as new developments lease up to mature occupancy levels.”

The Company has remained focused on its third-party management offering. A total of 26 properties are operating on this platform, 18 of which are in the UK. During the period, Stor-Age entered into a third-party management agreement with Hines to manage their acquisition of a self storage portfolio of three properties in the UK. Hines is a privately owned global real estate investment manager who own and operate US$93 billion of assets across property types and on behalf of a diverse group of institutional and private wealth clients. Stor-Age continues to work closely with Hines as they seek to deploy capital and build scale in the self storage market.

The Company’s loan-to-value ratio was 31.3% at period end, with 81.2% of net debt subject to interest rate hedging. In April 2024, Stor-Age raised R500 million in a debt auction allowing the Group to increase funding capacity, extend maturities and diversify funding sources. Noted Lucas, “While Stor-Age continues to benefit from a conservatively managed and interest rate hedged balance sheet, we do need to acknowledge the negative impact of the higher interest rate environment. While we have seen the first rate cut in South Africa and we saw a second rate cut last week in the UK, the cost of debt funding remains high. At an EBITDA level, we delivered attractive year-on-year growth of 7.9%, or R32.2 million, however net finance costs were up 21.8%, meaning that the R22.1 million increase in net finance costs effectively diminished our distributable income performance.”

Stor-Age has also continued its focus on environmental sustainability, further expanding its solar PV roll-out strategy across the South African and UK portfolios. To date, the Company has invested R72 million into renewable energy, generating over 7.7 million kWh of solar power. Currently, 60% of the portfolio has solar capacity installed.

Concluded Lucas, “We are well positioned from a strategic, financial and operational perspective as we approach the second half of FY25. We expect our South African portfolio to continue its positive growth trajectory for the remainder of the financial year, and we remain cautiously optimistic that our UK portfolio will deliver a robust set of results for the full financial year. Although competitive move-in pricing dynamics remain prevalent in the UK market, we are satisfied with our operating performance to date and remain confident in our ability to navigate the challenges that lie ahead.”

Stor-Age reaffirmed its FY25 full year forecast of distributable income per share to be between 122 to 126 cents.

The share closed on Friday at R14.95.

Key highlights for the period:

  • Earnings and total returns: Distributable income per share up 3.5% to 63.51 cents, with an interim dividend declared of 57.16 cents per share (90% payout ratio) and a total return of 10.91%¹
  • Financial performance: Same-store net property operating income up 9.6%, occupancy up 12 200m² and net investment property value up 5.4% to R11.5 billion
  • Portfolio growth: Added 10 properties, with the portfolio including the pipeline and ongoing developments now exceeding 680 000m². The growth includes five new developments, four third-party managed properties in the UK and the acquisition of Extra Attic in SA in September 2024
  • Strategic partnerships: Entered third-party management agreement with Hines in May 2024. Total of 26 properties now under third-party management
  • Balance sheet management: Successful debt auction raised R500 million below price guidance in April 2024, with a loan-to-value ratio of 31.3% and 81.2% of net debt subject to interest rate hedging
  • Environmental sustainability: Expanded solar PV roll-out, investing an additional R8.5 million during the period, with 60% of the portfolio now fitted with solar
  • Future outlook: Remain confident in business model’s resilience, reaffirming FY25 full-year forecast of distributable income per share of 122 to 126 cents

¹ 12-month dividend per share plus the increase in SA REIT net asset value (NAV) per share (for the 12-month period) as a percentage of SA REIT NAV at the start of the 12-month period

 

Redefine unveils newly expanded Pan Africa Mall

by

Redefine Properties unveils newly expanded Pan Africa Mall

 Johannesburg, November 2024 – Redefine Properties, South Africa’s listed real estate investment trust (REIT), has officially opened the newly expanded Pan Africa Mall. The expansion added 9,000sqm of additional retail space, increasing the mall’s total gross lettable area (GLA) to over 25,000sqm. The mall is co-owned by Redefine Properties and Talis Property Fund.

Pan Africa Mall, located in Alexandra, underwent a significant upgrade, offering a wider range of stores and restaurants for the community. The centre now features a new upper-level floor for fashion retailers, including the relocated Mr Price and Ackermans stores, and an extended ground floor, which includes a new Roots Butchery, an expanded Truworths, and an FNB branch. Notable new tenants include W.Edit, Sportscene, Pick n Pay Clothing, Jam Clothing, Hungry Lion, Vision Works, The HUB, Selfast, Nizams, Clothing Junction, and Tekkie Town.

Andrew König, Chief Executive Officer at Redefine, says, “The expansion of Pan Africa Mall is a major milestone for both Redefine and the Alexandra community. By creating opportunities for local businesses and investing in sustainable solutions like solar power, we are contributing to the area’s economic growth while ensuring the centre serves the community for years to come.” The new expansion reflects Redefine’s vision to enhance the retail experience and collaborate with the Alexandra community towards collective growth.

Pan Africa Mall’s environmental, social, and governance (ESG) credentials will be improved as the upgrade incorporates full back-up power and water – including the exploration of sinking a borehole, a R12.2 million solar photovoltaic (PV) system with an 851kWp capacity, and the installation of energy-efficient lighting and water efficient toilets. Including these ESG measures into the centre’s operations is vital to Redefine’s commitment to sustainability, enhancing customer loyalty, and future-proofing the shopping area, helping the community it serves.

Tebogo Mogashoa, Chairman of Talis Property Fund, adds, “As investors deeply committed to Alexandra, Talis Property Fund sees this expansion as more than just retail growth – it’s an investment in the social fabric and economic future of the area.

“We have seen how the Pan Africa Mall has evolved into a welcoming space that fosters strong community connections, where families, small businesses, and social partners come together. Building on a foundation of trust, our partnerships remain instrumental in creating lasting value, reflecting the strength of collaboration in stimulating local economic development.

“We’re grateful to our social partners who have played a central role in helping us realise this vision.”

In a pioneering initiative, the centre was the first of its kind in South Africa built with fully integrated public transport, which includes a 50,000sqm taxi facility. Street hawkers are now being offered permanent stalls – managed by the Alexandra Taxi Association. Redefine is committed to growing smaller businesses and improving the area for customers.

“This project is about more than just expanding a shopping centre. It is about empowering local businesses and driving urban renewal in Alexandra. Redefine is committed to creating lasting value for the community and shaping a sustainable future for South African cities,” König concludes.

Growthpoint unveils second phase at Arterial Industrial Estate 

by

Growthpoint unveils second development phase for Cape Town’s Arterial Industrial Estate 

85% of the first phase is already let with keen demand for this prime location

Construction of the new Arterial Industrial Estate in Cape Town is steaming ahead, with Growthpoint Properties (JSE: GRT) having moved into phase two of the world-class development.

Arterial Industrial Estate is a development by Growthpoint on a 71,656sqm site in the heart of Blackheath, a growing and modernising industrial node in Cape Town.

After phenomenal success with phase one, during which national and international tenants snapped up 85% of available space, Growthpoint has launched phase two of the Arterial Industrial Estate development.

Growthpoint’s decision is in response to growing demand for space — as seen in four out of five industrial units released in the first phase of the new development, which commenced construction in July 2023 and was completed in April 2024, already being taken up by tenants. Only a single unit of 3,503sqm, perfect for light industrial businesses, remains in the phase.

The first phase of Arterial Industrial Estate spans 19,741sqm, originally featuring six warehouse units, each with a two-storey office block. Jotun, a leading decorative paints and coatings manufacturer, was among the first to secure space at Arterial Industrial Estate, opting to combine two units for its new and larger head office premises of 5,713sqm. Other tenants with facilities at Arterial Industrial Estate include well-known logistics companies Nexus Fulfilment and RTT, as well as leading tyre distributor ATT Auto Truck & Tyres.

Growthpoint has started phase two of construction, which will add 21,840sqm of lettable space, more than doubling the size of Arterial Industrial Estate. This second phase will add a further six warehouse units, ranging from 2,945sqm to 5,713sqm, enhancing the estate’s capacity to cater to diverse business needs. Arterial Industrial Estate Phase Two will be ready for occupation from March 2025.

Timothy Irvine, Growthpoint’s National Client Experience and Western Cape Asset Manager, says the new phase of the development is already seeing great interest from potential tenants. “The demand for space at Arterial Industrial Estate is unsurprising, considering the development’s central and attractive location and the steady demand for industrial space currently being experienced in Cape Town.”

Arterial Industrial Estate is close to Cape Town International Airport, public transport nodes, and arterial routes important for South Africa’s economic activity. The estate is close to the R300, N1, and N2, with prominent visibility along the Stellenbosch Arterial Road highlighting its effortless link to the winelands.

Irvine says Arterial Industrial Estate’s proximity to arterial roads, and the country’s air and sea ports network, makes it a sought-after physical address in Cape Town. “Businesses situated at this prime location can efficiently connect with both local and global markets.”

Growthpoint’s experience in logistics and industrial property investment and development enhances the experience for existing and would-be tenants at Arterial Industrial Estate. The estate boasts 24-hour security and access control, flexibly sized warehouse and office space, and measures for efficient water and energy use. Phase one of the Arterial Industrial Estate has seen the installation of solar panels, which is set to help tenants secure sustainable energy.

The estate has achieved a 4-Star Green Star certification in the industrial property category from the Green Building Council of South Africa. This is aligned with Growthpoint’s goal of making its vast portfolio of properties environmentally sustainable. Growthpoint’s climate commitment target is being carbon neutral by 2050. Its sustainable business practices help tenant businesses towards their own ESG goals and support long-term cost savings for its clients. 

Lango concludes retail acquisition from Hyprop and Attacq

by

Lango concludes c.US$200 million Africa real estate acquisition from Hyprop and Attacq

In one of the largest real estate transactions in Africa over the past year, Lango Real Estate Limited has agreed to acquire the Africa (ex-South Africa) retail real estate portfolio ultimately owned by JSE-listed REITs Hyprop Investments Limited and Attacq Limited.

Lango, a leading real estate company focused on direct investments into prime commercial assets in key gateway cities across the African continent, agreed on the acquisition of a portfolio of four shopping malls located in Accra, Ghana and Lagos, Nigeria, with an attributable value in excess of US$200 million.

The assets acquired include three retail assets in Ghana, including the iconic Accra Mall, one of the leading retail assets on the continent, along with Kumasi City Mall and West Hills Mall. Ikeja City Mall, arguably the most successful retail asset in Nigeria, was also acquired. The portfolio was acquired via an issue of Lango shares to the vendors, along with part debt-finance, with RMB acting as lead arranger.

Launched in 2018, Lango was originally established by South Africa’s largest primary JSE-listed REIT, Growthpoint Properties Limited, and LSE- and JSE-listed global investment manager, Ninety One (previously Investec Asset Management). Growthpoint also has a c.20% shareholding in Lango, alongside other notable South African and international institutional investors.

Lango has an established track record in concluding successful and accretive transactions, such as the RMB Westport property portfolio, the largest portfolio acquisition on the continent (excluding South Africa), and has achieved further significant growth. It has successfully managed to aggregate a high-quality portfolio of commercial real estate assets to attain meaningful scale and relevance in the sector.

Lango focuses on prime income-generating office, industrial and retail assets spread across key gateway cities in four countries: Ghana, Zambia, Nigeria and Angola. Assets include landmark properties such as the Standard Bank (Stanbic) head office in Ghana, Standard Chartered Head Office in Ghana, Manda Hill Shopping Centre in Zambia, and The Wings, an A-grade office complex in Victoria Island, Lagos.

Thomas Reilly, CEO of Lango, says, “This transaction is a significant milestone for Lango and not only fits squarely into our growth strategy, but is also highly accretive. The scale achieved by Lango undoubtedly positions it as a leading Sub-Saharan African firm in the industry. Lango will now have c.US$875 million of assets under management across four countries, with arguably some of the best-performing landmark commercial properties across both the retail and office sectors in select growth cities. These assets are well-positioned to allow Lango to extract synergies and further enhance growth with a high degree of resilience to differing market cycles.”

Reilly adds, “We are excited to once again take advantage of a highly attractive entry-point in the cycle, adding quality yielding assets in select cities to our asset base at competitive prices, which we believe have the potential to offer strong growth prospects. The business continues to enjoy significant momentum, and we expect this to aid in the delivery of sustainable long-term investor returns.”

Morne Wilken, CEO of Hyprop, adds, “Hyprop management has previously committed itself to achieving several strategic initiatives, with the exit of Sub-Saharan Africa being one of the last remaining initiatives to be completed. The successful implementation of this transaction will achieve this initiative, and we look forward to working with Lango to completion.”

Attacq CEO, Jackie van Niekerk, comments, “Our Rest of Africa (ex-South Africa) investment has become a small component of Attacq’s real estate investments and has been earmarked as part of an exit strategy by way of an orderly disposal. We are delighted to reach a point where a transaction with a credible counterpart in Lango has been agreed.”

Reilly concludes, “The growth and scale that Lango has achieved, supported by our partners in this transaction, enhances Lango’s ability to further entrench and capitalise on its position as a dominant player in the African real estate market, and creates a platform to facilitate considerable future growth as it heads toward a listing on the LSE.”

South Africa’s office sector recovering with increasing demand for space in some nodes

by

As the return to the office continues to gain momentum, demand for office space is increasing, and vacancies are declining with an improvement in property fundamentals.

Real estate investment trusts (Reits) who recently published their results point to the recovery of the sector with demand for space exceeding limited supply especially in certain Cape Town nodes, with rental growth reported in some instances.

SA REIT Association CEO, Joanne Solomon commented: “Some of our members with exposure to offices are cautiously optimistic about the sector. Vacancies are falling though negative reversions still persist within certain portfolios.”

“In many global markets [South Africa included], many workers continue to return to the office. Amenity-rich and quality buildings in key locations continue to see improved property fundamentals, demand for space and slight growth in rentals.”

“Flight to quality is driving demand for prime offices as tenants see value and opportunities to upgrade from secondary buildings or locations,” said Solomon.

According to the Sapoa Office Vacancy Report for the first quarter of 2024, national vacancies reduced slightly from 16.7% in 2022 to 14.7%, but rentals declined 6.2% year-on-year after accounting for inflation.

Cape Town offices recorded the lowest office vacancies of 6.8% – the lowest rate recorded since 2009. Nationwide, nearly 60% of prime office buildings were fully let compared to 42% recorded at the beginning of the Covid-19 pandemic.

“The reduction in office vacancies indicates an improvement in demand for offices – assuming the decrease is not attributed to disposals or conversions of office space to residential for example,” said Liliane Barnard, CEO & Portfolio Manager at Metope Investment Managers.

Barnard said the decline in rentals reflects ongoing pressure on rental income from the office sector, adding that property valuations remain under pressure.

“The outlook for the office sector is cautiously positive, and a recovery in the South African economy will result in declining rentals turning positive. Though reversions have been negative – this rate of decline is slowing which suggests a potential levelling out as demand picks up – in the Western Cape, this is already happening with rental growth experienced in some locations,” said Barnard.

Growthpoint Properties said across its portfolio, vacancies are reducing, and though rentals have been stagnant over the past few years, growth in rentals is now evident in the coastal regions.

“Vacancies seem to have peaked – arrears are back under control, and we are seeing more demand from tenants inland, while our coastal properties are relatively well let,” said Paul Kollenberg, Growthpoint Properties Head of Asset Management: Office.

Delta Property Fund, the specialist sovereign-underpinned property fund renewed 55 leases and signed 69 new leases for the financial year ended 29 February. Of the 55 renewals, 24 related to sovereign tenants with the balance being to the private sector with average lease terms of 28 months. On new leases, only two related to sovereign tenants with the rest being the private sector.

“Various interventions such as having a dedicated team of leasing specialists, discounted rentals, intensified marketing campaigns and broker engagements with attractive incentives have resulted in vacancy reductions and tenant retention while minimising operating expenses,” said Tumelo Applegreen, Senior Asset Manager at Delta Property Fund.

Applegreen said due to these interventions, post year-end, Delta conclude 15 new leases to date for the 2025 financial year.

Growthpoint Properties offers incentives on certain buildings, with deals tailored to suit individual tenant requirements. The group’s strategy is to reduce office exposure to smaller buildings in nodes that are not seeing demand, as well as sell non-core assets for conversion to residential or other uses.

Delta which continues to sell non-core assets, transferred three properties during the 2024 financial year, with a further three transferred post year-end, and another four in the process of being transferred.

“We are still finding buyers with appetite for our assets – our mandate is to sell at market value or higher which implies a prolonged and difficult negotiation process to close a deal,” said Applegreen.

Barnard said taking a long-term view and believing the economic fortunes will improve bodes well for the recovery of the office sector. Location will be key – meaning offices close to transport hubs as well as prime buildings or offices with green features such as back-up power and water, electric vehicle charging stations and bicycle racks for example, will experience high demand.

“The sector may be worth investing in for long-term gains if economic conditions improve and rental declines stabilise. However, in the short-term, the sector may continue to face challenges due to economic uncertainties and shifts in work patterns,” said Barnard.