Emira continues to recycle capital and rebalance its portfolio
Growing its exposure in the biggest Western market and extending its global investment strategy, Emira Property Fund has invested in its fourth US shopping centre.
The JSE-listed REIT has undertaken its fourth equity deal in the USA with its in-country partners, the Rainier Group of Companies. Emira acquired 49% of Stony Creek Marketplace, a dominant power centre valued at $32 million, located in Noblesville, Hamilton County in the state of Indiana.
The investment represents a cash on-cash return of 11,7% in dollars for Emira, on a net cash equity investment of $6,5 million. The investment was funded from Emira’s existing balance sheet, chiefly with the proceeds of its programme of asset disposals from its portfolio rebalancing plans.
This deal takes Emira’s exposure to the USA to 3% of its total assets and its international exposure in developed markets to 9% of total assets including its investment in ASX-listed Growth point Properties Australia (GOZ). The latest addition to Emira’s USA portfolio is a 204 000 m2 convenience retail power centre located in Indiana, near to two of Emira’s existing investments in Ohio.
The centre is in the Indianapolis metro area, which ranks very highly on the best places for business in the USA and boasts a low unemployment rate of a mere 3,1%. Stony Creek Marketplace is shadow anchored by a 162 000m2 Meijer grocer, which forms part of the centre but is owned by the grocery chain.
The modern convenience centre was originally constructed from 2003 to 2005 and has since been regularly refurbished. The property asset is 98,9% leased with 79% of its space let to nationals including TJ Maxx, Home Goods, Best Buy and PetSmart. It has a weighted average lease expiry of 3,9 years. Geoff Jennett, CEO of Emira Property Fund, comments: “With this transaction, Emira benefits from growing exposure to the attractive value available in the USA in our chosen market segment.
We have targeted investment in grocery anchored convenience retail centres in resilient markets located in some of the major southern and central states.” On the home front, Emira continues to recycle its capital by disposing of certain assets in accordance with its portfolio rebalancing plans. So far this calendar year it has sold and transferred three assets – two offices and one non-core retail property – for a combined R250 million.
This adds to the tactical impact of its R236 million of disposals made in the latter half of 2017 when Emira sold six further assets. Jennett adds: “These transactions continue to deliver on Emira’s strategic thrust to rebalance our portfolio and reduce our exposure to offices.
In addition, we have achieved disposal prices at an average premium to book values, which signals that our properties remain fairly valued in line with our robust financial management approach.”
Emira is a medium-cap diversified JSE-listed REIT that is invested in a quality, balanced portfolio of office, retail and industrial properties. Its directly held assets comprise 111 properties valued at R12,7 billion and indirectly 21 shopping centres valued at R900,8 million through its exposure to Enyuka.
Emira is also internationally diversified through its investment in ASX-listed GOZ valued at R940,4 million, and its equity investments in four grocery anchored convenience centres with a combined value of $32,2 million through its USA subsidiary.