In August 2014, Emira acquired an R830 million portfolio of eight properties from the Integri-t Property Fund– a private, unlisted fund. Of the eight properties acquired by Emira, six are located in the Western Cape andthe remaining two in Gauteng. The selected properties have a combined GLA of 59 017m2 and the portfolio is classified as 48% retail, 37% office and 14% industrial. The higher retail component of the portfolio is in line with Emira’s strategic objective to increase the weighting of retail properties in the portfolio. One of the two Gauteng properties — Makro in Selby, Johannesburg — accounts for 33% of the acquired portfolio’s combined GLA with its 19 705m2 area, and equates to 42% of the portfolio by value
Acquiring the A-grade property portfolio forR830 million, presented Emira with an opportunity to complete asubstantial, high quality transaction. These eight properties have an average value of R104 million,substantially greater than the current average property value of the Emira portfolio, which was R76 million asat 30 June 2014. This is in line with the Fund’s strategy of investing in larger, high-quality assets that are easier to manage. Six of the eight acquired properties are situated in the Western Cape, a region where Emira’s portfolio requires more presence.
The Fund has been strategically targeting the area for a number of years and the acquisition of the portfolio represents a meaningful step towards diversifying the Fund’s geographical exposure. Most significantly, the portfolio has strong, long-term leases in place with high quality tenants. The portfolio’s weighted average lease expiry (length of average lease) is 5,5 years —the longest of which is a ten-year lease with Makro. Expected annual escalations of 8,4%over the lease period will provide a robust growing income stream.
- R830m with a combined GLA of 59 017 m²
Although earnings neutral in its first year, the acquisition is expected to be earnings enhancing thereafter. The acquisition was made through a combination of debt facilities from Rand Merchant Bank, Nedbank and Standard Bank as well as R310 million of equity — which was raised by Emira in the form of a PI offer in July 2014. The transaction received Competition Commission approval in August 2014.
The acquisition of the Integri-t portfolio successfully meets all of the Fund’s strategic objectives, namely: growth of the Fund’s asset base with large high quality assets, predominantly retail focussed, and located in the Western Cape, with long-term escalating leases to high quality tenants, with a beneficial impact to earnings.