Redefine, Tower and Hyprop boost offshore arms

Given the poor performance of the rand and inflation, It has become a growing trend that South African listed property companies are broadening their offshore footprint, particularly in Eastern European countries.

While domestic investors welcome the opportunity to gain exposure to foreign real estate markets, analysts are becoming increasingly cautious of local companies rushing offshore. The general view is that South African players that are only now trying to build a global presence may find it is too little, too late.

The listed property sector continues to see more counters embark on offshore investments, this time with Redefine Properties, Tower Property Fund and Hyprop being wooed by Eastern Europe’s real estate market.

Sector heavyweight Redefine on Tuesday announced it had bought 75% investment stake into a 1.2 billion Euro commercial platform comprising 18 properties in the Polish market.

The acquisition was made possible after Echo Investment made a decision to split its high yielding platform from its development and residential business and to find a buyer for the commercial real estate platform in which it will retain a 25% stake.

The deal is the largest ever real estate investment transaction in Poland. It is also the largest ever single transaction of income generating real estate assets in Central Eastern Europe.

Echo Investment is a recognized market leader in the Polish and Central and Eastern Europe commercial and residential property development and investment space, having completed over 115 real estate projects in 37 cities and 4 countries.

Redefine’s executive Chairman Marc Wainer calls the deal “a game-changer” for Redefine.

Apart from the Polish deal, Redefine is also in the process of establishing an investment presence in Spain and diversification into student accommodation in Australia.

“Although 2016 is proving to be a tenant’s market across all domestic sectors, it is not all doom and gloom for us as our geographic diversification now really begins to work for us,” concludes Wainer.

Tower Property Fund announces largest acquisition to date

Tower Property Fund recently announced its largest acquisition to date – a Euro 66 million deal that sees the fund expanding its offshore presence through the purchase of four retail centres in Croatia. 

The acquisition results in retail properties making up 50% of the fund’s total portfolio which the company has been working towards for some time.

Purchased from Agrokor d.d, which is the largest company  in the Adria region - employing over 65 000 people and concentrating its interests in food retail and food production with an annual turnover of approximately Euro 6.5 billion -the portfolio comprises of four quality shopping centres all anchored by Agrokor’s affiliate, Konzum d.d.  Konzum, similar to South Africa’s Pick n Pay, is the largest retailer in the region and has the dominant market share in Croatia (where it has over 740 stores and employs more than 14 000 people), Serbia, Slovenia, Bosnia, Herzegovina and Montenegro. 

Two of the properties are known as Super Konzum’s, which are similar to the South African Hypermarkets and the other two are convenience shopping centres with strong line shops including H&M, New Yorker, DM, Mueller and others.

CEO Marc Edwards said the acquisition was "an excellent move for Tower".

"These retail centres have been sold by Agrokor in a sale and leaseback in order for them to utilise the cash more effectively in their business given they are a retailer and property is not their core strength," said Mr Edwards.

Hyprop acquires 60% interest in two south-eastern european malls

Early February, Hyprop Investments Limited also made its first foray into Eastern Europe, buying significant stakes in a mall in Serbia and one in Montenegro for about R2bn.

Hyprop acquired a 60% interest in Delta City Belgrade, which it purchased from Delta Real Estate Group, a private Serbian company, and Delta City Podgorica, which it purchased from Hemslade Trading Limited Cyprus and Delta.

The total purchase consideration was €203m (about R3.68bn), of which Hyprop’s effective share would be €122m (R2.21bn). The Homestead Group, associated with South African property investor Louis Norval, a nonexecutive director of Hyprop, acquired the remaining 40% in both malls.

"Hyprop has elected to acquire the shopping centres in an offshore joint venture with Homestead as it is of the view that Homestead has significant value to contribute as a result of its knowledge of the area and its access to other potential transactions," said Hyprop CEO Pieter Prinsloo.