In other news, the JSE All Property Index closed at 10 235 last night following the MPC's unanimous decision to reduce the repo rate by 25bps to 8%.
SA’s overall office vacancy rate at the end of Q3 2024 was 13.6%, down 60 bps from the previous quarter and the 9th consecutive quarter of improvement, according to SAPOA’s latest Office Vacancy Survey. This improvement was coupled with another quarter of positive y/y growth in asking rentals which increased by 2% when measured against the prior year’s comparative period. Q3 2024 also witnessed improved q/q vacancy rates for all grades, particularly A-grade office space which saw the largest improvement of 80 bps while prime office space experienced the largest y/y improvement with its vacancy rate decreasing 200 bps to 7.5%.
Qualifying Wits students are to benefit from the R200m sale of Frankenwald Estate to a property consortium for the development of the mixed-use Bankenveld District City. All proceeds from the sale of the land and the future sale of residential and commercial sites will be placed into a special endowment fund to support the academic project including students who qualify to study at Wits but who do not have the financial means to register. Bankenveld District City has approved rights for up to 20 000 homes together with commercial, industrial, office space, educational facilities, and green open spaces. Calgro M3 and Eris Property Group (the consortium) will share the cost of infrastructure and installation whereafter Calgro M3 will be responsible for the residential components of the development while Eris will handle the commercial aspects for their own benefit.
Hyprop’s SA portfolio beat guidance for the year ended June 2024 with its nine retail assets (four in the Western Cape and five in Gauteng) achieving higher tenant turnover, foot count, and trading density. Its overall rent reversion rate improved to a positive 5.8% compared to a negative 7% the previous year. Canal Walk opened 20 new stores during the reporting period with Somerset Mall launching a new Checkers FreshX and an upgraded Pick n Pay Hypermarket. Somerset Mall is in the process of a two-year expansion project which will add 5 400m2 of GLA. The REIT acquired Table Bay Mall during FY2024 for R1.68bn which continues to trade well. Its LTV currently sits at 36.4%.
Exemplar REITail, in partnership with Nedbank CIB, are hosting the 2024 Township Retail Investment Summit (TRIS) at Alex Mall on the 2nd of October. In its third year, the event will shine a spotlight on the transformative potential of investing in SA’s township retail sector where growth opportunities are vast and critical for sustainable community development. Delegates can attend in person or virtually.
Spear REIT has completed an equity capital raise of R457m via a vendor consideration placement on the cusp of implementing its R1.1bn acquisition of a thirteen-asset Western Cape portfolio from Emira Property Fund. The vendor consideration placement will allow the issuance of 50,302,197 new shares to public shareholders at an issue price of R9.10 per share with the equity placement completed at a 1% discount to Spear’s 30-day volume-weighted-average price (VWAP). The listing and issuance of the new shares are expected to commence on Monday, the 23rd of September 2024. The REIT’s LTV, following the vendor consideration placement and the implementation of the new portfolio acquisition, will be approximately 34%.
Adjudication in SA’s built environment is resulting in more settlements between parties, according to MDA Attorneys’ annual adjudication survey results for 2023 which has picked up on a new trend with settlements reached in just over 13% of the law firm’s adjudications during the period compared to zero in previous years. While there were fewer adjudications y/y, the value of disputes referred for adjudication increased significantly. Almost half of the disputes had a monetary value of up to R5m; 13% fell within the range of R5m – R10m and around 50% had a monetary value of between R10m – R50m. Interestingly, there were no claims for defective work and disputes on the enforcement of contractual rights were 25% lower than 2022.
