Property group Pareto is pressing ahead with a R1.1bn deal to secure full ownership of the Sandton Convention Centre and the Sandton Towers and Garden Court Sandton City hotels from Liberty Group without Southern Sun.
Pareto, owned by the Government Employees Pension Fund (GEPF), exercised its pre-emptive right — a move that allows existing owners to buy stakes before they are offered to external parties — to increase its holding from 25% to a 100% undivided share.
In the initial structure, Pareto, which already holds a quarter of Liberty’s Sandton Consortium, was set to increase its stake to half, while Southern Sun was slated to acquire the remaining 50%.
The Competition Commission and Competition Tribunal approved the deal last month and Pareto is now in the process of formally notifying the authorities that it will no longer be acquiring the properties under joint control with Southern Sun, but solely under Pareto, it said.
“We decided to retain the alignment of the ownership of the leisure properties with that of the mall. Just like other precinct properties such as the V&A Waterfront, keeping the properties in one structure with common shareholding makes decision-making easy and the precinct strategy cohesive or aligned,” Pareto CEO Malose Kekana said.
The deal marks Pareto’s entry into the hospitality sector, adding to a portfolio that is heavily weighted towards retail. The move is fully in line with the company’s strategic direction, he said.
“Pareto owns large regional shopping centres and has bulk for further development. Given that the malls are large and most big-box tenants are reducing the retail format, the opportunity to expand existing malls is limited,” Kekana said.
Last year Pareto embarked on its first residential project, valued at R850m, converting Menlyn Office Park into residential units in partnership with Divercity Urban Property Group.
“These are prominent properties in a Sandton area that is highly desirable as a place to live, work and play, dubbed the richest square mile in Africa. They will defend the value of the portfolio over a long period. They also add incredible strong value to our brand equity as Pareto,” he said.
Kekana said the group is exploring opportunities to activate and diversify its malls through mixed-use developments, including hotels, residential units and entertainment. Its plans include hotels at Menlyn, Pavilion, Mimosa and Tyger Valley.
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