Emira enters its fourth US deal
Emira Property Fund, the only South African realestate group which owns property in the US directly, has bought into its fourth shopping centre in the world's largest commercial property market. /
Emira Property Fund, the only South African real-estate group which owns property in the US directly, has bought into its fourth shopping centre in the world's largest commercial property market.
The JSE-listed real estate investment trust (Reit) said it had undertaken its fourth equity deal in the US with its in-country partners in the US, the Rainier Group of Companies.
Emira has been trying to enhance its international portfolio to diversify against South African real-estate risks.
This latest deal has taken Emira’s exposure to the US to 3% of its total assets and its international exposure in developed markets to 9% of total assets, including its investment in Australia-listed Growthpoint Properties Australia.
Emira acquired 49% of Stony Creek Marketplace, a dominant power centre valued at $32 and, located in Noblesville, Hamilton County, in Indiana.
The investment represents a cash-on-cash return of 11.7% in US dollars for Emira, on a net cash equity investment of approximately $6.5m.
The investment was funded from Emira’s balance sheet, largely with the cash proceeds from recent asset disposals.
Stony Creek is a 19,000m² convenience retail power centre located in Indiana, near to two of Emira’s properties in Ohio.
The centre is shadowanchored by a 15,000m² Meijer grocer, which forms part of the centre but is held by the familyowned grocery chain.
The modern convenience centre was originally constructed from 2003 and completed in 2005, but has since been refurbished on a regular basis.
The asset is 98.9% leased, with 79% of its space let to nationals including TJ Maxx, Home Goods, Best Buy and PetSmart. The property has a weighted average lease expiry of 3.9 years.
“The centre is in the Indianapolis metro area, which ranks very highly on the best places for business in the US and boasts a low unemployment rate of a mere 3.1%,” said Emira’s CEO Geoff Jennett.
Emira has targeted investment in grocery-anchored convenience retail centres in resilient markets located in some of the large American southern and central states, including Ohio and Texas.
“We are confident that our low-risk co-investment strategy in the US remains the most prudent way to increase our international diversification into this developed market,” explained Jennett.
Keillen Ndlovu, head of listed property funds at Stanlib, said numerous South African funds had considered investing in the US but they had faced various challenges, mainly relating to how to deal with tax issues.