A new blue-chip commercial property portfolio with successful big-name properties across SA at its core is set to be listed on the JSE within the next year.

Ben Kodisang, MD of Old Mutual Investment Group Property Investments (OMIGPI), the property asset management and development arm of Old Mutual SA, announced on Thursday that the fund, provisionally called the Triangle Real Estate Core Fund, will comprise a mix of 40 prime retail, industrial and office properties, but is overwhelmingly weighted with various large regional retail properties.

It will be valued at approximately R12bn, making it the third largest fund by value in the JSE’s listed property sector. “The listing is scheduled for mid-2011, depending on market conditions and the completion of a number of requirements. It is therefore our immediate goal to raise R5bn in the next year to launch the fund,” said Kodisang.

The portfolio will include some of SA’s most prominent shopping centres such as Gateway Theatre of Shopping in Durban, Pretoria’s Menlyn Shopping Centre, Cavendish Square in Cape Town, Riverside in Nelspruit and Vincent Park in East London. These centres and others give the fund a retail focus, with a robust 68% exposure to that sector.

The capital generated from the fund will, among other things, be used to add an additional 80,000sqm to the Menlyn Shopping Centre of which 40,000sqm will comprise retail space and the rest including high-rise office buildings.

“We expect the listed fund, which will be structured as a Property Loan Stock, to be very attractive to investors for its characteristics of large, dominant, top-quality properties with blue-chip national tenants, exceptional income stability, and a history of outperforming in the unlisted property sector, among others,” he said.

“These top five retail properties comprise over 50% of the fund’s value, making it a very concentrated, and therefore easily managed, portfolio.”

“Their high-quality, regional or super-regional status also lends the portfolio a defensive quality, which was demonstrated during the recent economic downturn as these centres benefited from the trend of consumers shopping less frequently, but spending more per visit. This defensiveness is also bolstered by OMIGPI’s sophisticated tenants mix management, which has helped to give income streams a low correlation with the recent economic down-cycle.”

Likewise, Norbert Sasse, CEO of Growthpoint Properties Limited, recently told Property24 that the focus is currently on bolstering and expanding flourishing existing commercial properties rather than developing new ones. “We’ve bought the remaining 13% of the Benoni Lakeside Mall exactly for this reason. We previously owned 87% and thought that all the dynamics are right for us to buy the remaining share because of its good performance.”

Apart from retail, the Triangle Real Estate Core Fund offers 13% exposure to the office sector and 9% to the industrial sector, with the remaining 10% made up of cash and working capital. Major office properties include Triangle House in central Cape Town, while industrial properties feature Phumelela Park in Cape Town’s Montague Gardens.

As expected, the fund’s geographical epicentre will be Gauteng, with 32% exposure, followed by KwaZulu-Natal with 28%, the Western Cape with 21%, Mpumalanga with 6% and the Eastern Cape with 3%.

“Currently, occupancy levels are good, given the subdued retail environment,” said Kodisang. The overall portfolio has a weighted occupancy rate of 93,4%, while the weighted average lease period is also favourable at 6,4 years. - Eugene Brink

Readers' Comments Have a comment about this article? Email us now.