GEPF and Growthpoint acquire SA’s landmark V&A Waterfront

Norbert Sasse, CEO of Growthpoint Properties Limited.

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The Government Employees Pension Fund (GEPF), represented by the Public Investment Corporation Limited (PIC), together with Growthpoint Properties Limited today announced that their purchase, in equal proportions, of South Africa’s landmark V&A Waterfront is now complete and all conditions have been fulfilled.

The new owners have wasted no time confirming their commitment to the ongoing development of V&A Waterfront. They announced the R500-million redevelopment of the landmark Clock Tower precinct over the next four years - one of the biggest business developments since the inception of the V&A Waterfront almost 22 years ago. Development has already commenced.

The V&A Waterfront transaction represents South Africa’s biggest single property transaction to date with the new owners paying a combined investment of some R9,7 billion for South Africa’s most popular tourist destination, which is widely recognised as one of the finest waterfront developments in the world.

Located around the historic Victoria and Alfred Basins which formed Cape Town’s original harbour, the V&A Waterfront is a mixed-use property development and a South African showpiece.

“The V&A Waterfront acquisition has ensured that the ownership of one of the most prestigious properties in South Africa is again vested in the hands of South Africans and specifically the South African worker base, in the form of 1.2 million public servants, who are members of the GEPF,” says Chairperson of Government Employees Pension Fund, Arthur Moloto.

“The purchase of the V&A Waterfront meets our objectives of a sound investment, while effectively contributing to the sustainable economic development of South Africa.”

For the PIC, as custodians of a significant part of the public purse, the transaction meets its property strategy which focuses on both returns generated as well as positive change to the social fabric.

“This transaction proves that creation of relevant physical infrastructure, together with productive communal spaces, can have significant impacts on the quality of life of the majority of South Africans,” says Elias Masilela, CEO of Public Investment Corporation. “This transaction delivers value to our clients whilst making meaningful additions to much needed infrastructure, thus benefiting all of society.”

Norbert Sasse, CEO of Growthpoint Properties Limited, explains that the V&A Waterfront, with its established record of performance, represents an opportunity for growth, which will come from the future development of the undeveloped bulk of this prize property asset.

“Our investment in the V&A Waterfront is driven by the existing performance and future potential,” says Sasse. “More than being the premier property asset in Africa, the V&A Waterfront has all the performance fundamentals in place. It enjoys robust demand across all sectors with lower vacancy rates than anywhere else in the country and benefits from significant net income growth.”

Growthpoint is the largest South African listed property company and is included in the JSE ALSI 40. Its 50% stake in the V&A Waterfront takes its total assets to in excess of R40 billion. Growthpoint owns a quality portfolio of some 460 properties throughout South Africa and in Australia, spanning the retail, office and industrial sectors.

The GEPF is Africa’s largest pension fund. It has more than 1.2-million active members, around 318 000 pensioners and beneficiaries, and assets worth R819-billion. This effectively means that this iconic landmark is now owned by more than 1,5 million South Africans as a result of GEPF’s investment portion alone.

The PIC, which is wholly owned by the South African Government, is one of the largest investment managers on the African continent with assets under management exceeding R910-billion.

V&A Waterfront CEO David Green says that the V&A Waterfront management team is extremely positive about the transaction.

“We pride ourselves as being a benchmark for international waterfront developments and the change of ownership bodes well for long-term development and sustainability,” notes Green. “The new owners have shared their immediate plans for the property and we are looking forward to working closely with them to bring these plans to fruition.”

The major Clock Tower Precinct development will establish a new professional business district at the heart of V&A Waterfront while maintaining the heritage credentials of one of the oldest sites in and around Cape Town.

In addition to the refurbishment of the existing Clock Tower retail facility, the other areas earmarked for development include the unused grain silo building, and the collier jetty alongside the Clock Tower retail centre.

This new development at the V&A Waterfront is possible as it consists of 603,868sqm of bulk development rights approved by the Cape Town City Council. Approximately 64% (383,833sqm) has been developed and approximately 36% (220,035sqm) remains available for development.

“The significant value potential to be unlocked through the development of the approved bulk at the V&A Waterfront was always a key component to the transaction,” explains Sasse.

“The development rights provide flexibility in terms of land use rights and timing of development and we intend to pursue new developments which create the best value over time, which is consistent with Growthpoint’s objectives of providing our linked unitholders with long term sustainable income and capital growth.”

John Oliphant, head of Investments and Actuarial at GEPF, notes the investment follows a decision to enhance the GEPF property portfolio mix by adding premium office space, retail and development opportunities to grow this portfolio segment over the medium term.

"The purchase extends GEPF's investment in the Western Cape from 12% to almost 30%. It also makes the pension fund a major player in the retail sector as well as improving its office holdings," adds Oliphant

Masilela explains that any new development which is embarked upon at the V&A Waterfront stems from an exceptional and solid foundation. “It is a historic landmark and desirable location on a vibrant working harbour, which is an important international trading route for South Africa,” notes Masilela.

He emphasizes that while the future development of the V&A Waterfront remains flexible, it will be sensitive to the needs of Cape Town and integrate with the city. “This has already started with the IRT bus route which runs through the V&A Waterfront, providing easy public access.”

The developed property boasts a well established and mature portfolio of properties across the retail, office, hotel and industrial sectors, with attractive rentals, rental escalations and lease expiry profiles. The V&A Waterfront has a mix of long-term high profile retail and business tenants.

The effective date of the V&A Waterfront transaction, for reporting purposes, was 1 January 2011