PROPERTY: Largest Commercial Property Deal
Recent Western Cape Business News
Old Mutual Life Assurance Company of South Africa (OMLACSA), current owner of the premier retail properties, Cavendish Square and Connect Shopping Centre in Cape Town and Menlyn Park Shopping Centre in Pretoria, has signed sale agreements in respect of 50% undivided ownership interests in these properties with Pareto Ltd., for a purchase price of close to R2.5 billion.
Old Mutual Investment Group Property Investments, which currently manages the two retail properties, is being retained as managing agent. The parties have agreed to a market-related fee for the management of the assets by OMIGPI.
Ben Kodisang, managing director of OMIGPI said this is the largest commercial property transaction in South Africa since the sale of the V&A Waterfront.
“The sale of part ownership in these premier retail properties and the price achieved supports the market values of our portfolio and clearly demonstrates that good quality property still commands value even in a depressed market,” Kodisang said.
The transaction is not yet final. It is subject to certain suspensive conditions, including the successful conclusion of the co-management agreement and regulatory approvals.
Commenting on the deal with Old Mutual, Alex Phakathi, Pareto’s managing director, said: “These are significant acquisitions for Pareto as they give us a presence in the important Pretoria market and increase our asset exposure in the Western Cape – Cavendish Square and Connect Shopping Centre has the highest LSM footprint in the Cape Town area.”
“We are now represented in South Africa’s commercial, administrative, legislative and judicial capitals, which are markets with substantial purchasing power,” Phakathi adds.
Old Mutual’s strategic rationale for the sale of the properties is that OMLACSA’s policyholder funds were overweight in property, particularly within the retail sector. This transaction enables them to reduce their exposure and rebalance the mix of their total property portfolio while retaining a meaningful interest in both Menlyn and Cavendish. Both properties remain strongly performing assets and underpin the quality of the total property portfolio known as the Triangle Core Fund.
OMLACSA will continue to be a major property investor and developer, and specifically will be co-investing alongside Pareto in further expansion of these precincts into the future.
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