International banking group Old Mutual has entered into a R10-billion asset swap transaction with business firm Pareto, involving major shopping centres Menlyn Park, in Pretoria, and Cavendish Square, in Cape Town.

A media statement released on Wednesday explained that Pareto would acquire the 50% share in the Menlyn Shopping Centre that it did not already own from Old Mutual, while Old Mutual would acquire the 50% share in Cavendish that it did not own from Pareto, with the net consideration payable in cash.

Old Mutual and Pareto had equally owned the two centres for five years, undertaking extensive developments. Menlyn was currently undergoing a development upgrade.

The two-phase project, led by retailer demand and growing shopper support, would add almost 50 000 m2 and 200 more stores to the centre. It would also create new diverse retail and entertainment areas in the mall. Construction started in April 2014, with the entire project scheduled for completion in November 2016.

Old Mutual Property MD Peter Levett, who managed the properties, said the asset swap was mutually beneficial for both companies and that the decision was based on ensuring optimal growth in their respective property portfolios.

“We are pleased with this value-enhancing [swap], which gives us outright ownership of a key retail centre, Cavendish, and enables us to access additional development opportunities within our portfolio. Our ability to reinvest the net cash proceeds in new developments will further enhance value in our strong portfolio of retail, office and industrial assets which total a combined R20-billion,” Levett added.

Pareto CEO Marius Muller commented that the company was “thrilled” with the transaction. “Menlyn Park Shopping Centre is an unrivalled retail property that is an ideal fit for Pareto’s portfolio, especially as its current R2-billion redevelopment project reflects Pareto’s strategy of adding value to our assets,” he noted.

“Last year marked significant strategic growth of Pareto’s portfolio of strongly-trading malls, with Pareto securing sole ownership earlier this year of other landmark retail property assets across Gauteng and the Free State,” Muller pointed out.

The transaction was subject to Competition Authority approval and other conditions associated with a transaction of this nature.