JSE-listed Emira Property Fund has acquired its twelfth grocery-anchored open-air shopping centre in the US.
Always investing together with its in-country US investment partners, the Rainier Group of Companies, Emira has now invested a further $18.45-million into the equity of a 542 000 ft2 super-regional, open-air shopping and dining power centre.
The Summit Woods Crossing in the growing suburb of Lee’s Summit in Kansas City, Missouri, is Emira’s biggest and highest-value single US investment to date.
In almost five years since it began investing in the US in 2017, Emira has grown its equity investments in the region on an incremental deal-by-deal basis into a 350 000 m2 portfolio of a dozen dominant open-air power centres, the company acclaims.
The portfolio’s value is $660-million, of which Emira’s equity investment is R2.2-billion.
Total offshore equity investments in the US now represent 17% of Emira’s total asset base, further strengthening its diversification, which is a key strategic philosophy for Emira, the company outlines.
“Our US equity investments have become a critical and core strategy. They enhance Emira’s diversification by geography, tenant and economy.
“We have established a record and built good relationships in the US market with our partners, which enabled us to access this great investment at an approximately 10% annual cash on cash return in dollars a year. However, we anticipate a much higher total return from our investment in dollars,” says Emira CEO Geoff Jennett.
This is the first time Emira has made an investment in the US with the express aim of undertaking a significant asset management initiative to create a capital value uplift while still satisfying its yield requirements.
It intends to add a second grocer anchor to reinforce the centre’s dominance and unlock further value from the property.
“This transaction is positive for Emira’s balance sheet and income statement. Supporting the investment, the debt for the acquisition was raised in the US at property level before US interest rates increased substantially.
“Emira has recycled capital from certain disposals together with using existing debt on its balance sheet to fund its investment, which was locked in before some of the recent devaluation of the rand against the dollar,” says Jennett.
The large grocery-anchored Summit Woods Crossing aligns strongly with all measures of Emira’s US investment strategy.
It has grocer Target as a shadow anchor with tenants including hardware giant Lowes, Kohl’s, BestBuy and TJ Maxx.
The centre is 98% let and over 90% occupied by national tenants with a high credit quality underpin. It has a 5.6-year weighted average lease expiry.
“Our international strategy enables capital recycling and allocation into more resilient environments than South Africa’s constrained economy, and provides dollar-denominated returns.
“Subject to the right opportunities being found, we intend to continue on this investment path, taking an opportunity-by-opportunity approach with our American partners, staying focused on our chosen segment of retail property and delivering on value for our shareholders,” Jennet says.