In one of their boldest moves to date, Spearhead Property Holdings have come close to the R1 billion asset barrier and tied up one of the largest Cape Town CBD property deals this year by buying the 14 storey Pier Place building on the Cape Town Foreshore. 

The price to be paid is R152,8 million.  Spearhead were introduced to the deal by Glen Mackie of Baker Street Properties. 

The building, now 12 years old, was developed by Murray & Roberts Properties with one of Cape Town’s most famous architects, Louis Karol, responsible for the design.  At the time of its completion, the building attracted favourable comments from the architectural fraternity. 

Mike Flax, Spearhead's Chief Executive, said that the deal suits Spearhead for several sound reasons.

"Firstly," said Flax, "as we have already announced, we intend to increase the number of A grade properties in our portfolio because we find that these tend to give stable returns in the long run.  This building is very definitely A grade:  with 15 000m2 of floor space and parking in an adjoining building for 333 cars, it must rank as one of Cape Town's finest office investments.

"Secondly, we see the office precinct around the Cape Town International Convention Centre, the Arabella Sheraton Hotel and several other buildings now rising in the area becoming a focal point in Cape Town, one in which almost all the space will be A grade. 

"Thirdly, the purchase fits in with our goal of having a 100% Cape Town portfolio by the end of this year.  The last few years have shown conclusively that our ability to read the Cape Town market slightly ahead of the field and to manage properties hands-on have been the key to our success.  We will, therefore, try to keep our portfolio within an hour's drive of our Foreshore head office."

Pier Place is anchored by the telecom giant, Vodacom, who have 84% of the space -this is their main Cape call centre and administrative office.  Other high profile tenants in the building are Colliers Property Services and Togo Gaming. 

Flax said that Spearhead had bought the property on a 9,8% forward yield and this should “sweeten” future yields for the company’s shareholders.  Spearhead is placing 6,2 million units to help finance the acquisition – and when these are listed, Spearhead’s capitalisation should move close to the R1 billion level. 

In pursuance of their 100% Cape portfolio goal, Spearhead are also putting their well established 14 000m2 Lyttleton Retail Centre up for sale.  The centre, which serves the fast growing hub of Centurion, has a value of R55 million and is anchored by Shoprite Checkers, along with Standard Bank, Foschini and Ackermans.

Various brokers have been mandated to call for bids which will be opened at the end of August. 

Spearhead is also redeveloping and selling off under sectional title its 2 000m2 Delft House office building in Rivonia at R6 000 per m2, inclusive of parking.  Flax said that the space here is likely to be snapped up by buyers.

"Right now," said Flax in a recent CNBC television interview, "we see Cape Town commercial and industrial space as being seriously undervalued and offering tremendous growth potential.  We are, therefore, prepared continue on the acquisition path for the foreseeable future."

Full details of the Pier Place purchase are available through SENS, the online Stock Exchange News Service.