Paraprop said the rationale behind the acquisition of retail property New Heritage Market in KwaZulu-Natal and industrial property Kulingile building in Gauteng was to grow the fund’s property portfolio with “quality properties”.
“This is in terms of the fund’s strategy to increase market capitalisation in order to achieve the benefits of scale such as increased diversity, lower volatility and increased liquidity for our shareholders,” said Paraprop.
The company said New Heritage Market, which is to be acquired for R96m, was a “lifestyle” shopping centre with an “unorthodox tenant profile” located in upmarket Hillcrest in Durban.
Paraprop executive director Bruce Kerswill said the New Heritage Market had a conventional section, including entertainment, restaurants and a supermarket, as well as an “unconventional” section including crafters, small specialist shops and boutiques.
“New Heritage Market is a collection of smaller buildings set in landscaped gardens.”
Kerswill said Spire Property Services, the manager of Paraprop, also managed New Heritage Market for the previous owners. “So we’re familiar with it and we felt it was a very good investment prospect. It has a stable tenant profile and it offers a different kind of retail experience. It is well known in KwaZulu-Natal,” he said.
Kerswill said the property had no vacancies and that if a tenant vacated, there was a “waiting list of tenants who would like to go in”.
“It has a high profile in a nice area and some of Durban’s best restaurants are located there.”
He said the Kulingile Building, which is to be acquired for R108m, was a big factory in Isando, near Johannesburg.
Kerswill said the building had a strong tenant in the form of Kulingile Metals with a long lease stretching to 2015.
He said the property was situated in a good industrial node, near the Johannesburg International Airport.
Paraprop has added about R600m worth of properties to its portfolio over the past six or seven months.
The company’s asset base is now close to R3bn and consists of a mix of industrial, office and retail properties.
Kerswill said Paraprop had been a “little overexposed on the office (property) side” and that it was “correcting that mix”.