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Spearhead buy two new premises in Epping.

Posted On Thursday, 24 February 2005 02:00 Published by eProp Commercial Property News
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Spearhead Property Holdings, has been purchasing new buildings at a rate of almost two per month

Property-Housing-ResidentialSince June 2004, Spearhead Property Holdings, the Securities Exchange listed property loan stock company recently rated as the top performer in its sector, has been purchasing new buildings at a rate of almost two per month - and has in that period spent over R165 million on new acquisitions.

Ilan Kaplan, Spearhead's analyst now making a name for himself for having a finger on the pulse of the Cape property market, said recently that with cap and interest rates likely to come down further this year, now is a good time to buy Cape industrial and commercial property – and Spearhead expect to have a portfolio of over R1 billion in the next calendar year. Currently their portfolio is valued at R700 million.

The company's two latest buys are in Epping II. The properties purchased have the same holding company, and the existing tenants both have eight and a half year leases still to run. Their agreements are in the triple net lease category which leaves them responsible for all expenses and maintenance on their premises.

In the first building bought the tenant is Premquip, manufacturers and installers of shop fittings and equipment. Their building is a single storey industrial plant covering 12,500 m2 fronting onto Bofors Circle. Spearhead paid R11,9million, i.e. a price of roughly R948 per m2 - and their rentals here equate to R10 per m2, substantially below the going rate in Epping.

The second new Spearhead property is nearby, in Elliot Avenue. Here the tenant is Meditek-Hemco, manufacturers of hospital equipment. Spearhead paid R9,1 million for the 8 391m2 premises, which equates to a price of R1 084 per m2.

Kaplan said that in both premises the replacement cost would be in the region of R3 000 per m2 and, as land in the area now costs about R250 - R300 per m2, to get completed properties at around R956 to R1 050 represents good value. Down the line, when the current leases expire, he said, it is possible that these premises can be upgraded to match new premises being developed in the area.

Both buildings, said Kaplan, are giving a return of 13% which he regards as "an extremely satisfactory yield in today's market".

Last modified on Tuesday, 13 May 2014 11:53

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