Emira Property Fund has agreed to sell 13 predominantly industrial and office properties situated in the Western Cape to Spear Reit for R1.146bn, it said on Tuesday.
The transaction forms part of Emira’s strategy to recycle capital and the net proceeds will initially be used to reduce debt and fund new acquisitions, Emira said in a statement.
Emira, which is a 59.3%-owned subsidiary of Castleview Property Fund, said the transaction includes 12 freehold properties, in respect of which Emira has concluded a sale of rental enterprises agreement. It also includes a leasehold property — Freeway Business Park — in respect of which Emira has concluded a separate sale of rental enterprises agreement.
The purchase price will be settled in cash.
The acquisition provides Spear with a strategic opportunity to meaningfully increase its market share within the Western Cape, with a high-quality diversified property portfolio comprising industrial, retail, mixed-use and commercial assets, the group said in a separate statement.
It also offers an entry point into long-dated medical- and life-sciences-related facilities.
“The acquisition not only facilitates revenue and long-term growth prospects for Spear, but also creates operating efficiencies, enabling Spear (being a fully internally managed real estate investment trust) to increase operating profit margins and drive sustained profitability, by leveraging combined expertise and resources to reduce costs through economies of scale,” it said.
The acquisition will increase Spear’s assets under ownership from 29 to 40 high-quality real estate assets and will enhance its portfolio diversification and geographical spread of assets within the Western Cape, while maintaining its bias towards the Cape Town Metropole.
After the acquisition is implemented and the recent disposals by Spear, including the disposal of the Liberty Life Building, its assets under ownership will increase to about R5.4bn and the gross lettable area of its portfolio will rise to about 502,000m2 within the Western Cape.
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