Emira launches USA real estate Investment strategy
Emira Property Fund announced that it is pioneering USA property investment for the South African investment market. Emira’s new USA investment strategy, to be undertaken with its strategic US partners, will focus on grocery-anchored convenience retail centres.
Emira is already internationally diversified, with 6%of its income derived from its investment in ASX-listed Growth point Properties Australia (GOZ). Its USA investment strategy will see this quickly grow to an overall 8% with potential to expand to at least 10%.
Geoff Jennet, CEO of Emira Property Fund, comments: “We have targeted further international diversification in developed markets and identified the USA as being the best fit for us. It is the primary first world market and the US dollar is the world’s benchmark Currency. As the biggest market in the Western world, if is extremely solid and well diversified, plus we see attractive value in our chosen segment.”
He adds: “We like what we see in this market and believe our USA investment strategy is prudent, risk mitigated, recession resistant and will offer good returns. We have committed R290 million to our initial investment in the USA, which is only about 2% of our total assets.”
Key to its USA investment strategy, Emira will co-invest with Rainier Companies, a Dallas, Texas-based investment and real estate business, which is headed by Texan J Kenneth Dunn, its cofounder and principal. Rainier shares strong synergies with its South African counterpart.
It is driven by a small entrepreneurial team and has built a successful 15 year track record as a skilled real estate investor and asset manager. Rainier currently has more than $1.5 billion property assets under management.
Where opportunities meet predefined investment criteria, Emira and Rainier will partner on a 49% to 51% equity basis, respectively, at the individual property level. Emira will hold its investments through a USA-based subsidiary, managed by in-country fund manager Continuum Investments LLC, based in Dallas, Texas, which is headed by CEO Rick Makin, a USA-based South African entrepreneur. In fact, it was Emira’s relationship with Makin and business partner Alan Burrow that placed it in the exclusive position to take advantage of this opportunity.
By investing in this way, Emira and Rainier will assemble a tailor-made investment portfolio to suit the co-investors’ unique investment objectives.
If has identified certain states in the USA, including some of the major southern and central states, which have meaningful GDP growth rates, as the target territories for its investment. Also, it has identified grocery-anchored convenience shopping centres, around 5 000 m?to 40 000 m? in size, as its asset class of choice.
Already, two quality assets have been identified for investment, and the first deal transferred in October 2017. Emira hence owns a minority equity stake in
the Belden Park Crossings shopping centre in North Canton, Ohio, for which it paid R112 million ($8.4 million). The centre is well tenanted and this first deal includes lead co-investor Stark Enterprises, which is a well-known and respected US retail property developer and investor. The second asset that is already under contract is situated in Texas. Jennet confirms that convenience retail is a safer and familiar property asset class for Emira. The type of shopping centres it is targeting in the US are supported by people buying their everyday basics. This makes them more resilient through different economic cycles, which
also mitigates risk for Emira. Further, the chosen states offer immense opportunity, with growing economies and populations, which together with low unemployment rates, support consumer spending.