Fairvest in takeover of Bara Precinct
JSE-listed property company Fairvest acquired a controlling stake in Bara Precinct, giving it a firmer foothold in the country’s developing township economy.
The township economy remains unsaturated, with many formal businesses now seeing it as an opportunity in which to gain market share.
Fairvest will own 50.17%, while NewCo, a subsidiary of the Buffet group, will hold 49.73% of Bara Precinct.
The Bara Precinct properties that form part of the deal are located in Soweto and include the Diepkloof Hotel, Soccer Centre, Blackchain Centre, Bara Square, JPC Centre, Toby centre and Mogai Centre. The aggregate value of the properties comes up to about R322.4m.
The average size of a Fairvest centre is 5,000m² and anchor tenants tend to include one of Shoprite, Boxer, Spar or Pick n Pay stores.
The group said the acquisition was in line with Fairvest’s strategy of acquiring assets servicing the lower LSM market located in nonmetropolitan areas, as well as rural, convenience and community shopping centres located in high-growth nodes, close to commuter networks. The aim is to provide shareholders with "attractive returns and distinctive diversified opportunities", the company said.
Property analyst at Stanlib Lawrence Koikoi said the township market was still a strong one despite the tough economic climate in the country.
"It is a cash-based market, with many still reliant on social grants," he said.
The acquisition of Bara Precinct was in line with Fairvest’s growth strategy and the company’s track record. The ability to grow in these spaces spoke for itself, he said.
Fairvest was the top-performing real estate investment trust (Reit) for the year to June, with a 38.5% annualised return. It is among the leading Reits in terms of performance over three and five years.
The group has a market capitalisation of R1.6bn. Its total property portfolio value rose 14.5% to R2.2bn. It also raised R224.5m worth of new equity during the year to June.