JSE-listed Emira Property Fund has acquired its eleventh grocery-anchored dominant open-air shopping centre in the US, growing its equity investments in the country to more than R1.5-billion, or $105-million.
The highly attractive Newport Pavilion power centre acquisition strengthens the quality and value of Emira’s equity investment portfolio in the US and increases its offshore diversification, the real estate investment trust explained on June 22.
It added that, since launching its US investment strategy in 2017, Emira has assembled a portfolio of 11 value-focused open-air retail centre assets representing 12.1% of its total portfolio.
CEO Geoff Jennett said the Newport Pavilion is a “great asset” that meets every measure of the company’s US investment strategy.
Emira’s strong balance sheet position, with cash on hand to deploy, enabled the company to pursue this acquisition and further its opportunity-by-opportunity approach to owning a growing portfolio of great retail real estate in the US.
“Our investment strategy facilitates capital recycling and allocation into more resilient environments that can act as a buffer against South Africa’s constrained economy with dollar-denominated returns.
“We target first-rate assets that we believe are undervalued, but have secure income streams, a favourable outlook and the potential for capital appreciation over time,” Jennett further explained.
He added that Emira would remain focused on its chosen segment of the retail property asset class in the US and would continue to grow its investment in the US, together with its US partners on an incremental deal-by-deal basis.
Emira co-invests in the US with its in-country partners, the Rainier Group of Companies.
Rainier president and CEO Danny Lovell said the group was “particularly excited” to partner with Emira in securing the retail asset, which is said to be anchored by high-performance grocers and with good defensive characteristics, including high occupancy levels, favourable lease terms and added value creation potential.
The transaction was secured with flexible funding at favourable rates, emphasising the strength of the property.
MORE ON THE PROPERTY
The dominant regional open-air power centre includes the lease of grocery anchor Kroger. Tenants also include Dick’s Sporting Goods, TJ Maxx, Petsmart and a noteworthy component of restaurants and speciality food options. It also has a strong shadow-anchor in Target.
The centre is 98% let and more than 90% occupied by national tenants, providing a high credit quality underpin, and it has a good 5.3-year weighted average lease expiry.
The centre is on the doorstep of the world-class Cincinnati central business district (CBD), home to the thirtieth largest economy in the US and several Fortune 500 companies.
Newport Pavilion is dominant in a well-established trading area and is accessible to commuters, making it very convenient for residents with strong spending power and a popular hotspot with the Cincinnati CBD lunch crowd.
The grocery-anchored dominant value-orientated convenience retail centres in prospering markets in the US in which Emira invests have performed better than enclosed malls and lesser quality properties in the context of Covid-19.
They are geared towards communities, provide essential goods and services, especially grocer anchors, focus on the popular value retail segment, have quality tenants, and offer open-air environments where people feel safe.