McCormick and Putprop in deal announce venture to build two shopping centres
Developer to contruct malls in Mamelodi in Tshwane and Dobsonville in Soweto
One of SA’s oldest rural shopping centre developers, McCormick Property Development, is bringing two new malls to communities in Tshwane and Soweto, giving them access to certain brands for the first time.
McCormick and bus company Putco’s property arm, Putprop, have agreed to develop and co-own a shopping centre in Mamelodi, Tshwane and another in Dobsonville, Soweto.
McCormick, which builds malls in semi-urban areas and townships, was founded in 1983 by John McCormick. His son, Jason, is an executive at the group and in 2018 listed Exemplar, a real estate investment trust with R5.5bn worth of retail assets, acquired from McCormick Development.
Putprop was listed by Putco in 1988.
“We are going to create malls that fulfil community needs. We cannot say who the tenants are yet but the malls in these areas have not had a good enough offering and we see a gap that we can fill,” Jason McCormick said.
McCormick Development will purchase a 50% share in two bus depot sites from Putprop. The malls will then be developed on the sites.
The properties are Portion 111 of Farm Mamelodi 608 and Portion 21 of Farm Vogelstruisfonten 233.
The Mamelodi property measures 4.2178ha, while the Dobsonville property measures 5.0064ha. There are no structures on the Mamelodi property.
The Dobsonville property has a gross lettable area of 3,500m2, which is fully let by Putco. This lease expires in December 2020. A redevelopment clause in the lease has, however, been activated with effect from November 1 2019.
The Dobsonville property is achieving average rental of R88/m2.
McCormick said he expects the mall at the Dobsonville property to be between 10,000m2 and 18,000m2. The Mameolodi mall would be 15,000m2.
“There are two malls which will be well-supported by their communities. While SA’s property market is in a very tough spot while the economy struggles, we are finding pockets of opportunity,” he said.
The price payable by McCormick to Putprop for its stake in the project will be calculated at 50% of an amount of R800/m2 of the final gross lettable area of the shopping centres.
Exemplar has a first right of refusal on the shopping centres, meaning it will have the option of buying the completed malls before they are offered to the market.