JSE-listed Redefine Properties on Thursday said it had completed the R4.1-billion acquisition of the Leaf Capital portfolio of properties, a deal which significantly boosted the company’s Western Cape office portfolio.
This included Black River Park, which offered 74 000 m² of office space, Wembley Square and The Boulevard and equated to nearly two-thirds of the acquired portfolio, with average property values at R900-million each.
“This is a very important deal for us. The acquisition of the Leaf portfolio is in line with our strategy to invest in a diversified portfolio of high-quality assets. Importantly, it also changes the face of our Western Cape portfolio, which will now include the top 5% of [high]-quality office blocks in Cape Town and a number of the country’s greenest complexes,” Redefine CEO Andrew Konig CEO said.
Besides the key Western Cape properties, the company also acquired six property assets in Gauteng, including Bryanston properties Silver Stream Business Park, Silver Point Office Park, Crawford House and Hampton Park, as well as the Clearwater Office Park, in Stubens Valley, and Centurion Gate, in Centurion.
The portfolio was underpinned by strong lease covenants, with 37% of the portfolio expiring in more than five years. The fund maintained a tenant retention ratio of 82%, as well as delivered growth in lease renewals of 1.51% at a weighted average escalation rate of 8.1%.
The Redefine portfolio also had future additional development potential as it included developable bulk at Black River Park, The Boulevard, Silver Stream Business Park and Centurion Gate.
The combined properties, which equated to an initial income yield of 8%, were well located in major metropoles and benefited from strong lease covenants and high-quality tenants, such as Amazon, Medscheme, Kumba Iron Ore, Dimension Data and the Green Building Council of South Africa.
GREENING ITS PORTFOLIO
Within the Black River complex, Black River Park North was the first office complex to be rated in terms of the existing building accreditation, while the entire complex was the first office complex to get each of its buildings Green Star rated, which included the first 6 Star Green Star SA rating.
“The Black River Park complex has set itself apart owing to its pioneering green initiatives and sustainable building management – from indoor environmental quality, energy emission, materials and waste, to transport solutions. We are exceptionally pleased to acquire this property, which so perfectly supports our commitment to promoting sustainability in the industry,” Konig commented.
He also noted that green buildings were becoming more attractive to both tenants and investors, largely owing to the triple-bottom line commitments to building efficiency, social sustainability and environmental sustainability.
“Environment-friendly buildings are rapidly gaining popularity among both tenants and companies as businesses look for buildings that will complement their sustainability ethos and practice. The industry has [not only] begun to recognise the increasing importance of green buildings [with regard] to achieving both environmental sustainability and lower operational costs but also as a valuable differentiator for landlords.
“Turning either new or existing buildings into green buildings not only makes them more environment friendly but also makes them more profitable and contributes positively to the economy,” he explained.
Further, Konig highlighted that in South Africa, the benefits of adopting energy efficient initiatives were even higher compared with other regions owing to the “massive” impending hikes in electricity tariffs and increased risk of load shedding, which in many cases, was crippling businesses.
New technologies and a better understanding of green construction – such as that displayed at the Black River Park complex – were also driving rapid, positive change in the sustainable design and construction process.
“Designing smart, sustainable communities makes good business sense and we can already clearly see that people and businesses are looking for safe and liveable places to live, work and play, with good-quality urban design and buildings. By embedding these principles of good design from inception, we can also make them affordable communities, where the sustainable benefits reach further than just the physical buildings. Acquiring assets, such as the Black River Park complex, is an important step in that direction,” Konig concluded.