Nick Wilson

Property Editor

UP TO R1bn will be spent on refurbishing and expanding existing property assets over the next two years by the Old Mutual Investment Group Property Investment’s (OMIGPI’s) Triangle Core Real Estate Fund.

Colin Young, head of institutional property at OMIGPI, said on Friday a large chunk of this spend would be on its super-regional shopping centres.

The idea was to make sure these centres would be “enhanced” when the retail property cycle turned around.

Although there was a retail slowdown in SA over the past year, Young said the Triangle Core Real Estate Fund, which owned properties valued at just more than R12bn, believed “super-regional shopping centres are resilient in any economic cycle, which makes our portfolio very defensive”.

SA retailers were reeling from a slowdown in spending as fewer shoppers visited shopping malls due to rising food prices which had squeezed many family budgets.

He said some smaller retailers were struggling but the group had not seen any material changes to its tenancies at its shopping centres.

Super-regional shopping centres are properties that are bigger than 100000m² such as Gateway Theatre of Shopping in Durban and Menlyn Park in Pretoria.

Triangle Core Real Estate Fund’s retail assets account for 75% of the fund’s total portfolio, with offices, industrial property, cash and listed property making up the balance.

The fund’s joint fund manager, Gary Hardisty, said that one expansion would include an additional 10000m² being added to Gateway at a cost of R130m. This would bring the total gross lettable area at Gateway to more than 150000m²

Hardisty said the fund’s Menlyn Park shopping centre in Pretoria would be undergoing an expansion and upgrade costing at least R500m. This would take place on the site next to the existing shopping centre.

The tenant offering at the nearby Menlyn Retail Park value centre, also owned by the fund, would be completely changed to reposition the centre as a lifestyle shopping centre.

“The fund’s focus is on sweating our existing assets,” he said.

Depending on the success of capital raising within the retirement fund market further acquisitions were likely, said Young.

He said that OMIGPI had total property assets valued at R32bn following an aggressive expansion over the past three years.

Three years ago about 5% of parent company Old Mutual’s total investment portfolio consisted of property. This allocation had doubled to 10%, which boded well for the asset class, said Young.

Triangle Core Real Estate Fund is an open-ended fund aimed at institutional retirement funds offering quarterly liquidity.

OMIGPI’s development fund called Triangle Real Estate Development Fund, which is aimed at a far broader range of investors, will be raising R15bn in new capital over three years for five large property developments around SA.

All three are mixed use developments but with a strong office component to them.

Source: Business Day