Property loan stock company ApexHi Properties is increasingly investing in the refurbishment of existing buildings in its portfolio at returns of between 10% and 12,8%, states ApexHi MD David Rice.
He says that the current economic environment makes the buying of yield-enhancing properties difficult.
“The refurbishment projects are not only intended to maintain and improve the quality of the buildings, but are often undertaken to grow income,” states Rice.
He mentions that the redevelop- ment and refurbishment of exist- ing centres are core to ApexHi’s strategy.
“We are continuously improving the quality of our portfolio by upgrading, adding bulk to exist- ing schemes and sweating the assets,” states Rice.
The company announced, this year, that it would invest R1-billion in refurbishment projects to grow income in its portfolio.
Projects worth R570-million are already under way, and refurbishments for a further R357-million are currently in the planning phase.
ApexHi reports that the redevelopment of Horizon View shopping centre, on the West Rand, in Gauteng, which forms part of the refurbishment programme, is 65% let more than seven months ahead of construction completion.
Rice says the modern design of the centre and its good location have attracted retail rentals which have met, and in some cases exceeded, budget, and the development is expected to deliver on its target yield of 12%.
The Horizon View shopping centre was demolished to make way for a new upmarket convenience shopping centre called The Village @ Horizon.
The new development, valued at R212,5-million is by far the largest redevelopment project that the company is undertaking.
ApexHi reports that the Golden Walk shopping centre, in Germiston, is also undergoing a R100-million revamp at a 12% yield.
This includes the construction of an additional 12 000 m2, which will be added to either end of the existing shopping centre.
Rice says that this phase of the project will be completed and launched by the start of November.
Food retailer Pick n Pay has also initiated a R4,5-million upgrade to its store, and 100% of the new space has been let, with the remaining 14% currently under negotiation.
Rice says a number of the retail centres in the portfolio service the commuter market and efforts have been made to incorporate and accommodate taxi ranks within the developments.
ApexHi states that a taxi rank accommodating about 86 taxis has moved on site, and is expected to further boost the record footfalls the centre is currently experiencing, despite the construction activity.
Cleary Park, in Port Elizabeth, is also located opposite a major bus transport hub and already accommodates about 400 taxis on site.
The R87,5-million refurbishment project, which is due for completion in April 2009, will also include an upgrade of the taxi rank and the erection of hawker sites.
Other projects already under way include the reconfiguration of Maynard Mall, in Cape Town, for R35-million; an internal revamp and remix of tenants at Ermelo Mall, for R41-million; a refurbishment of Moreleta Plaza in Pretoria, for R31,5-million; and an additional 160 parking bays at Pine Parkade, in Durban, for R8,5-million, all yielding returns of between 11,5% and 12,8%, reports ApexHi.
A further R350-million worth of refurbishment projects are currently in the planning stage and include Game Centre, in George, four convenience centres in Soweto, Kopanong, in Hammanskraal, Kempton Square Phase 2, in Kempton Park, and Jewel City, in the Johannes-burg inner city.
Meanwhile, ApexHi states that the R35-million refurbishment of Maynard Mall, in Wynberg, Cape Town, is also on track and set to be relaunched on November 1, 2008.