Emira to grow US asset base to 15% of its overall portfolio
JSE-listed real estate investment trust (Reit) Emira Property Fund is planning for its US assets to make up 15% of its overall portfolio in the next two years.
Its US investments, mainly grocery-anchored convenience retail centres, already make up about 8% of the overall portfolio.
CEO Geoff Jennett on Wednesday said the company was investing in the US to gain exposure to assets that were undervalued, but noted that this also helped Emira to offset the difficult economic conditions in South Africa.
Emira in June bought the University Town Centre, in Maryland, for $63-million and, in May, the Wheatland Town Crossing, in Texas, for $32.2-million.
Earlier in the year, it had bought the San Antonio Crossing, also in Texas, for $22.6-million, which was the only acquisition below the company’s minimum requirement of a $25-million purchase price.
In 2018, the Reit acquired five retail properties in the US – the Truman Marketplace, in Missouri; Woodlands Square, in Florida; Stony Creek, in Indiana; Moore Plaza, in Texas; and 32 Eastgate Centre, in Ohio – for a combined $227.1-million.
The first property in its US portfolio was Belden Park Crossings, in Texas, which it bought for $67-million, in 2017.
All nine properties, which cost the company nearly $415-million, provide Emira with nearly 2.6-million square feet of trading space in the world’s largest economy.
Meanwhile, the US economy is seeing “moderate optimism” despite global economic uncertainty, Texas-based Rainier partner Danny Lovell said on Wednesday.
He pointed out that the US’s national unemployment rate was at a 50-year low of 3.5%, in contrast to South Africa’s unemployment rate of nearly 30%.
However, Lovell said that in order to temper growth, the US Federal Reserve was gradually increasing interest rates, with tempered inflation currently at 1.7%, compared with 1.6% in January.
This solid level of growth in the US economy, combined with the lower cost of living and better asset pricing, creates higher yields on investment, particularly for companies such as Rainier and Emira, Lovell added.
Rainier, which was founded in 2003, is Emira’s US partner and, where opportunities meet predefined investment criteria, Emira and Rainier partner on a 49% to 51% equity basis, at the individual property level.