THABANG MOKOPANELE

Property Correspondent

PROPERTY company Pareto has signed a sale agreement with Old Mutual Life Assurance to acquire 50% of Menlyn Park Shopping Centre in Pretoria and Cavendish Square in Cape Town for about R2,5bn — the biggest transaction in SA’s recent property history.

The last biggest transaction was when Dubai World bought Cape Town’s V&A Waterfront from Transnet for R7,3bn in 2006.

The transaction between Old Mutual and Pareto is not yet final and is subject to certain suspensive conditions, including the successful conclusion of the co-management agreement and Competition Commission approval.

Old Mutual Investment Group Property Investments, which manages the two retail properties, is being retained as managing agent.

The parties had agreed to a market-related fee for the management of the assets by Old Mutual Investment Group Property Investments.

Old Mutual Investment Group Property Investments MD Ben Kodisang said the sale was the largest commercial property transaction in SA since the sale of the V&A Waterfront.

Old Mutual’s strategic rationale for the sale of the properties was that Old Mutual Life Assurance Company of SA’s policy-holder funds were overweight in property, particularly within the retail sector.

Kodisang said the transaction enabled Old Mutual to reduce its exposure and rebalance the mix of its total property portfolio, while retaining a meaningful interest in both Menlyn and Cavendish.

He said both properties remained “strongly” performing assets and underpinned the quality of the total property portfolio known as the Triangle Core Fund.

“The sale of part ownership in these premier retail properties and the price achieved supports the market values of our portfolio and clearly demonstrates that good quality property still commands value even in a depressed market,” Kodisang said.

Pareto MD Alex Phakathi said that for the group, which is owned by the Eskom Pension and Provident Fund and the Public Investment Corporation, the significant acquisitions gave it a presence in the important Pretoria market and increased its asset exposure in the Western Cape.

“We are now represented in SA’s commercial, administrative, legislative and judicial capitals, which are markets with substantial purchasing power,” Phakathi said.

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Source: Business Day