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New acquisitions for Tower Property Fund

06 Feb 2015

Tower Property Fund has announced the pending transfer of R480 million worth of properties into the fund’s portfolio, with transfer expected to be finalised by the end of April. The purchase consists of three retail properties and two office buildings.

Marc Edwards, CEO of Tower Property Fund, says they expect Tower’s total portfolio to increase to R3.5 billion by June 2015.

This is according to Marc Edwards, CEO of the Tower Property Fund, who says the first office building is Unit 4 of the Whitby Manor Office Estate, which is situated just off the M1 Motorway in Gauteng and was purchased for R51 million.

The second office building purchase, at a cost of R192 million, consists of the majority of  sections of the Sunclare Office block, which is located on the corner of Protea Road and Dreyer Street in Claremont, just across the road from Cavendish Square. 

“Tower has purchased the majority of this terrifically located building that is perfectly poised to capitalise on its location, and offers competitive rentals to smaller businesses,” says Edwards. 

The three retail properties purchased by Tower are non-metropolitan shopping and community centres servicing the lower LSM markets in high growth nodes, close to commuter networks.

The Shoprite Centre in Brits is situated at 50 Pienaar Street, in the heart of the Brits CBD, and is anchored by Shoprite. “The centre has a very good mix of national tenants that will provide Tower with strong cash flows into the future,” says Edwards. 

 The Shoprite Centre in Modimolle (Nylstroom), situated in Nelson Mandela Drive, was built approximately five years ago and is anchored by Shoprite until November 2018.  “Located on the main arterial route into Modimolle and approximately 5km away from the Modi Mall, this centre also enjoys a strong national tenant presence of over 75%.”

The Shoprite Centre in Ennerdale is situated in Marais Close in a middle to lower income area. “The centre is anchored by Shoprite until May 2021 and has approximately 2 000sqm of additional bulk available for future development, says Edwards. 

“The centre is in good condition, but a minor face lift and enthusiastic management will add enormous value. A new drive-through KFC was recently completed and plans have been drawn to develop a new wing that Tower could consider at a later stage.”

Edwards says Tower plans to roll out an occupancy cost reduction strategy to these new buildings within the portfolio. “Tower has set a clear strategy of occupancy cost reduction across the board for all the buildings within the fund’s portfolio, with a strong focus on greening underpinning the fund.”

This pipeline of properties is coming from the private sector where landlords are prepared to take a percentage of Tower shares as currency for the transaction, he says. “As Tower is a REIT, holding the shares provides vendors with capital gains tax relief as well as diversification from single property risks.”

A further R500 million worth of commercial acquisitions is currently in the due diligence phase of acquisitions. Edwards says they expect Tower’s total portfolio to increase to R3.5 billion by June 2015.

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