Spearhead aims to double size of portfolio to R1.4bn

Posted On Friday, 10 December 2004 02:00 Published by eProp Commercial Property News
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Spearhead Property was set to double the size of its property portfolio

Mike FlaxCape Town - Spearhead Property was set to double the size of its property portfolio from the present R700 million to about R1.4 billion in the next three years, Mike Flax, the chief executive of the listed property loan stock company, said yesterday.

And assuming no capital growth, the company's market capitalisation was projected to grow from the present R374 million to above R700 million.

Spearhead, whose focus is on Cape-based properties, has grown its property portfolio by about 30 percent in the past year.

Flax said the plans for the next three years included the development of the 7ha Sable Square site next to Century City, just outside central Cape Town.

He said this would be South Africa's first factory outlet mall - a retail set-up that sells slow-moving or behind-season lines at massive discounts.

The mall would focus on leading local and international clothing and sportswear brands.

The retail development of 25 000m2 would consist of about 100 shops, with the development costs set at about R150 million. Local and international companies had already shown interest.

The group was also finalising plans for the erection of a 15 000m2 office block of about 16 storeys adjacent to the Cape Town International Convention Centre at a cost of about R140 million.

Work was expected to start in March next year, for completion in August.

Spearhead would also extend its Knowledge Park hi-tech office complex in Century City with a R100 million development after acquiring more land.

Spearhead had acquired a few sites at Airport Industria and planned a 25000m2 freight park at a cost of R70 million with the Airports Company South Africa, to be phased in over the next three years.

There was also 30 000m2 of industrial space planned at a cost of between R100 million and R140 million.

Two other large projects included a R45 million 9 000m2 shopping centre in Blue Downs, just outside Cape Town, in partnership with the Cavalier development group, as well as as an office and retail joint venture of R95 million in Gardens, central Cape Town.

In light of the consolidation already seen in the listed property sector, Flax agreed that Spearhead could be a target for a takeover. But he said it would not be easy, because the company had no controlling shareholders.

Flax was the biggest shareholder with 9 percent, and seven other shareholders had stakes of between 5 percent and 10 percent each.

He said he expected more hostile takeover action, similar to the current fight for control of MICC Property Income Fund by ApexHi and Vukile.

He said this was due to the increasing shortage of quality properties, together with a growing investor appetite for listed property.

"The listed property sector is set for continued solid growth, including more listings. The sector's market capitalisation could double to about R70 billion in the next three years."

Spearhead linked units were untraded at R18 yesterday, while the real estate index lost 0.18 percent.



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