Tower Property goes industrial

Published Jul 15, 2015

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Johannesburg - Tower Property Fund has secured its first significant exposure to the industrial property sector through the purchase of eight properties for a total of R375 million.

This latest acquisition by the listed property fund was in line with its strategy to increase its exposure to this sector to 20 percent and increases its property portfolio to 44 properties valued at R3.5 billion.

Tower said yesterday it had purchased a property portfolio of eight industrial properties from HBW Holdings, increasing its industrial property exposure to about 12 percent from 0.9 percent. The properties are the Meadowbrook Distribution Centre in Edenvale; 8 Industry Road in Kempton Park; 10A Cleveland Road in Cleveland; 320 Kuit Street in Pretoria; Route 21 Industrial Park in Irene; the Pick n Pay Distribution Centre in Pinetown; Nampak in Pinetown; and Arrowfield in Pinetown.

The properties fetch rentals of up to R65m² and the largest property is 15 500m² in size.

Marc Edwards, the chief executive of Tower, said the purchase of these eight industrial properties was in line with the funds strategy of growing its asset base with well located and diversified properties throughout South Africa.

Sluggish

“Despite challenges, such as sluggish economic growth and unstable electricity supply, certain nodes of the industrial sector are strong,” Edwards said.

He added that industrial was the best performing sector of the commercial property market according to the recent IPD annual South African property index.

The acquisition follows a number of other office and retail sector transactions concluded. It recently also purchased 15 Wellington Road in Parktown for R80.5m; Evagold Shopping Centre in Evaton in Gauteng for R110m; the Link Hills Shopping Centre in KwaZulu-Natal for R217m; and a portion of VMD KVART, an office property located in Zagreb in Croatia for e23.7m (R327.29m) in its first offshore property transaction.

Edwards said these recent acquisitions were pleasing because they provided strong and secure cash flows to the fund.

He added that while growth in size was not the main goal, it allowed them to diversify risks in certain sectors of the market that had been underperforming.

Edwards said Tower had grown the value of its portfolio in the two years since listing by 150 percent to R4bn from R1.6bn.

“At the same time, the company has sold and is selling some smaller, non-core properties, which results in a more sustainable and attractive portfolio for investors,” he said.

Tower Property Fund shares on the JSE were unchanged on Tuesday from a previous close of R10.10.

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