Arrowhead Properties diversifies with R1bn residential property portfolio acquisition

Posted On Thursday, 27 November 2014 18:17 Published by
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Arrowhead acquires R1 billion residential properties; increases total residential portfolio value to R1.6 billion.

Gerald Leissner

Arrowhead Residential Limited ("Arrowhead Residential"), a wholly owned subsidiary of Arrowhead Properties, the South African JSE listed Real Estate Investment Trust, announced the successful acquisition of various residential properties for a purchase consideration of just over R1 billion.

Once these acquisitions have been transferred Arrowhead will have a residential portfolio comprising over 3 600 units with a value of around R1,6 billion.

An agreement, subject to certain conditions precedent, was concluded in which a portion of the properties were bought from Jika Properties for a purchase consideration of R605 million at a yield of 10,1%. The portfolio consists of 1 629 residential units. This is the second transaction concluded with Jika Properties. The first transaction comprised of 889 units for a value just over R351 million.

"We are pleased to announce this yield accretive, distribution enhancing acquisition. This Jika acquisition is complementary to our current residential property portfolio with a guaranteed income of 10.1% in the first year and 10.9% in the second," commented Gerald Leissner, CEO of Arrowhead.

In addition Arrowhead Residential acquired the properties known as Amberfield Village and Park Village, both situated in Vanderbijlpark, various mixed use properties situated in Johannesburg CBD referred to as the Bree Street acquisition and Highveld View Estate, situated in Emalahleni, Mpumalanga. The aggregate purchase consideration in respect of these properties total R474 million and comprises of 758 units.

"Park Village is leased to the Vaal University of Technology and North-West University for student housing and transfer should be concluded during December 2014 whilst Amberfield Village, let to the Vaal University of Technology transferred on 15 October 2014," Carel de Wit, Asset Manager of Arrowhead, said. Combined, the properties comprise 218 residential units.

"The Bree Street properties will be managed by experienced inner city property managers that know the buildings very well and provide the necessary expertise needed to consistently manage residential and mixed use properties situated in central Johannesburg, whilst the Highveld View Estate is to be managed by the vendor who has the neccesary expertise and local knowledge to best manage the property," commented Carel de Wit.

"At an average acquisition yield of 10.7% for the Amberfield Village, Park Village, Bree Street and Highveld View acquisitions, Arrowhead continued to grow a diverse property portfolio, spread across locations, in line with our stated strategy of acquiring yield enhancing assets. We believe that there exists great opportunity for further growth in the residential sector," concluded Gerald Leissner, CEO of Arrowhead.

Last modified on Friday, 28 November 2014 10:17

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