The SA Retail board was confident the partners would play a meaningful role in furthering the company’s strategic and transformation objectives with their property skills and experience as well as excellent relationships with capital market players. SA Retail again cautioned unit holders on dealing since it was still in negotiations. SA Retail said a circular detailing the effects of the proposed R1 billion acquisition of properties from Sharemax Investments ( Pty ) Ltd would be distributed to unit holders shortly. The acquisition, still subject to certain conditions and statutory approvals, is one of five proposals, with an investment value of R1,2 billion, approved by the SA Retail board.

Others are the R43 million Dube Village Shopping Centre in Durban; the R11 million Summer Cottage in Fourways, Gauteng; the R86 million Hubyeni Shopping Centre opening in April in Elim, Limpopo, and the R92 million Axiz IBG property in Midrand. The Hubyeni Centre investment is the first of a number of turnkey shopping centre projects anchored by Spar which SA Retail may acquire, subject to approvals for R700 million over the next four years.

Managing director Peter Sparks said more than half of the net rental income for the period came from KwaZulu/Natal properties (R47 million) with Gauteng (R35 million) and Western Cape (R12 million) contributing the remainder.

He said the portfolio vacancy factor at September 30 was 2,7% and the expense-to-income ratio of 31% is lower than 32% in the previous financial year. Sparks said SA Retail’s major development projects are expected to contribute positively to earnings in 2007 and 2008.

These projects, with returns of up to 13%, include:

• the R170 million Umlazi Mega City, a Durban regional shopping centre which opened in April 2006
• the R59 million Pine Walk Centre, a value centre in Pinetown owned jointly with Vukile
Property Fund, opening in November 2006
• a R78 million fully let redevelopment of the Bluff Shopping Centre, Durban, and a R12,5 million development on the same site
• a R41 million extension and refurbishment of Highland Mews, Witbank, which had been given new life by the introduction of national stores with the latest specifications.
Sparks said SA Retail, coupled with this investment activity, was well positioned to take advantage of continued consumer confidence and increased trading densities in the portfolio, provided the current upward trend in interest rates did not temper current spending patterns.

He said capital expenditure of R77,3 million had been authorised for redevelopment and improvements of existing properties. Investment properties worth R172 million had been approved for disposal.

SA Retail sold properties for R33,5 million during the interim period. It had borrowings, attracting interest at prime less 2,3% a year, of R138,5 million or 6,1% of asset value at
September 30.