Basically the group, run by some of most astute property investors in the Cape, hit a snag about 18 months ago when the staggered issuing of B-Debentures to property vendors threatened to dilute the returns of existing debenture holders.

Fortunately the group was last year able to pull banking conglomerate Absa onboard as a strategic shareholder, which offered the directors some comfort as they sought acquisitions that would counter the dilutory threat of the remaining B-debenture issues.

The question now, of course, is whether Paramount has bought wisely, or whether there was a tad too much haste in pumping up the portfolio.

A few cynics believe Paramount has acquired a musty portfolio of mainly passé retail properties, and that tenant quality may be shown up in an economic downturn.

One Cape property personality, however, believes Paramount has bought well in spite of suggestions that the group may, in certain instances, overpaid for buildings.

So far this assessment seems correct with Paramount’s shares on the JSE Securities Exchange appreciating markedly in the last three months – something that may be helped by the favourable interest rate environment.

Another significant development is that a major Gauteng property investor has also taken a significant stake in Paramount, recently buying a large parcel of shares owned by clothing and textile giant Seardel.

Clearly the market (and Redefine) is anticipating that Paramount can pay a quarterly distribution bigger than the 12.5c per debenture of the last few quarters.

It may be worth scanning the individual deals to better assess Paramount’s prospects.

Near the end of 2003 Paramount acquired the Swiss Re building in the corner of Protea and Main roads in Claremont for R52.5 million. Described as a ‘trophy building’ by Paramount and over-capitalised edifice by others, the Swiss Re Building (now known as ‘Paramount Place’) was the first deal undertaken by the group with its new strategic shareholder (Absa).

Coinciding with this transaction was the acquisition of the Wasteman site at Airport Industria, at a cost of R12.4 million.

In March this year the group paid R27.5 million for the (some might say ‘unfashionable’) Goodwood Mall - a small deal but one that signalled the group’s intention to bolster the retail side of the property owning business.

Two months later Paramount shifted its attention to the Cape Town city centre by acquiring three office/commercial properties – 34 St George’ Mall George’s House (now under construction for conversion into hip inner city housing units) as well two Kloof Street properties (Varsity College Building and MLT House) – for R34 million.

In July this year Paramount sprung a major surprise by returning to the southern suburbs to buy the well known Pick ‘n Pay Centre in Claremont for R67 million.

The building is across the road from the Swiss Re/Paramount place property, meaning that Paramount has annexed both sides of the lower Claremont Main Road.

Some punters have questioned the longer term viability of the Pick ‘n Pay centre acquisition as the retail giant has signalled its intention to shift its headquarters in the not too distant future. Whether such a move affects, or rather influences, other tenants in the centre remains to be seen.

At the time of the deal Paramount chairman Rodney Squire-Howe noted there was significant additional bulk on the site. “The likely move by Pick `n Pay head office in 2006, combined with the programmed completion of the Claremont ring road, will unlock significant redevelopment potential. The property is seen as a redevelopment opportunity for Paraprop.”

The ‘big mother’ in terms of Paramount’s dealmaking came last month when the group opted to acquire the retail component of the Golden Acre centre on Adderley Street in Cape Town for R130 million. This acquisition is comfortably the biggest deal struck by Paramount, and represents more than 10% of the total property portfolio of R1.2 billion.

On the surface it seems Paramount is paying a premium to snatch a semi-decrepit city shopping node – a retail space that has seen its best days at least a decade ago.

But Squire Howe thinks different. “We believe that the Golden Acre has great potential - it is currently fully let, and will benefit from the revitalisation of the CBD and the growing trend of residential development in the city.” He argues the city is re-establishing itself as a major retail and entertainment node, and that the trend will be reinforced by the growing residential population.

“There are also planned development initiatives in the East City and around the station precinct, which will benefit the centre. It is our intention to fine-tune the retail mix and look at re-branding the centre as an exciting in-city shopping and entertainment zone.”

Squire-Howe adds there is potential for significant redevelopment in future. “We anticipate that the centre will further support the growth of the inner city.”

The bottom line is that Paramount is fast becoming a serious property force in the Cape – at least in sheer scale of the underlying property portfolio. But one has to wonder why the group has been so active in deal-making when market leaders like Spearhead and Atlas have remained relatively quiet.