R17.6m plan to light up mall

A TOTAL of R17.6 million was to be invested in generators for the super regional Wonderpark Shopping Centre in Pretoria by listed property fund Emira to help counteract the damaging effects of load shedding on their tenants.

Many other retail property landlords have taken similar action.

For instance, Tower Property Fund confirmed earlier this year its flagship Cape Quarter property had received an extensive photovoltaic solar energy system installation as part of its greening and occupancy cost reduction strategy.

Listed retail property fund Hyprop said earlier this year it would be installing additional generators at its shopping centres that did not have full electricity back-up in response to frequent power cuts to ensure uninterrupted trading.

A report commissioned by the SA Property Owners Association published in November last year revealed that electricity remained the largest cost as a proportion of total operating costs of property owners at 32 percent followed by rates and taxes (21 percent) and management costs (8 percent).

James Templeton, the chief executive of Emira, said this week that with Eskom unable to guarantee the supply of electricity to business, it had become necessary to investigate other power sources that would be able to keep businesses operating through load shedding.

“It looks like load shedding is going to be a reality for the next couple of years at least. Unfortunately, it has become the norm,” he said.

Templeton added that the daily load shedding for the Wonderpark Shopping Centre was scheduled at its busiest time of day from 4pm to 6.30pm. In addition, for stage three load shedding, the mall was switched off from 8am to 10.30am, he said.

Load shedding not only leaves the mall powerless but also has knock-on effects, such as damage to infrastructure as a result of electricity being switched on and off and security risks.

Five generators would be connected to the mall’s substations, providing sufficient power to run all retailers that did not currently have their own generators. The project to install the generators would be complete by mid-August.

Templeton said Emira was also actively playing a role in helping to prevent load shedding by taking strain off South Africa’s power grid with its renewable energy pilot project.

He said Emira recently installed a R6 million solar farm on the roof of its Epsom Downs Shopping Centre in Bryanston in Sandton. TOWER Property Fund has secured its first significant exposure to the industrial property sector through the purchase of eight properties for a total of R375 million.

This latest acquisition by the listed property fund was in line with its strategy to increase its exposure to this sector to 20 percent and increases its property portfolio to 44 properties valued at R3.5 billion.

Tower said yesterday it had purchased a property portfolio of eight industrial properties from HBW Holdings, increasing its industrial property exposure to about 12 percent from 0.9 percent. The properties are the Meadowbrook Distribution Centre in Edenvale; 8 Industry Road in Kempton Park; 10A Cleveland Road in Cleveland; 320 Kuit Street in Pretoria; Route 21 Industrial Park in Irene; the Pick n Pay Distribution Centre in Pinetown; Nampak in Pinetown; and Arrowfield in Pinetown.

The properties fetch rentals of up to R65m² and the largest property is 15 500m² in size.

Marc Edwards, the chief executive of Tower, said the purchase of these eight industrial properties was in line with the funds strategy of growing its asset base with well located and diversified properties throughout South Africa.

Sluggish

“Despite challenges, such as sluggish economic growth and unstable electricity supply, certain nodes of the industrial sector are strong,” Edwards said.

He added that industrial was the best performing sector of the commercial property market according to the recent IPD annual South African property index.

The acquisition follows a number of other office and retail sector transactions concluded. It recently also purchased 15 Wellington Road in Parktown for R80.5m; Evagold Shopping Centre in Evaton in Gauteng for R110m; the Link Hills Shopping Centre in KwaZulu-Natal for R217m; and a portion of VMD KVART, an office property located in Zagreb in Croatia for 23.7m (R327.29m) in its first offshore property transaction.

Edwards said these recent acquisitions were pleasing because they provided strong and secure cash flows to the fund.

He added that while growth in size was not the main goal, it allowed them to diversify risks in certain sectors of the market that had been underperforming.

Edwards said Tower had grown the value of its portfolio in the two years since listing by 150 percent to R4bn from R1.6bn.

“At the same time, the company has sold and is selling some smaller, non-core properties, which results in a more sustainable and attractive portfolio for investors,” he said.

Tower Property Fund shares on the JSE were unchanged yesterday from a previous close of R10.10.