Mercantile grants Lushaka R600m loan
Central Square top priority
LOCAL property developer Lushaka Investments, global construction group Mota-Engil Africa and Mercantile Bank have established a tripartite alliance for the multibillionrand mixed-use Central Square development in Sandton.
Mercantile Bank yesterday announced that it had granted a R600 million loan, the biggest single lending transaction in its 50-year history, to Lushaka Investments for the development of Central Square.
The R600m financing deal with Mercantile Bank was funded 50/50 by its sister bank in the Caixa Geral de Depósitos (CGD) Group, the largest bank in Portugal. It is for the second phase of Central Square, which involves the construction of 168 apartments in a 12-storey block adjacent to the World Trade Centre Building, which is scheduled for completion by the middle of 2017.
Karl Kumbier, the chief executive of Mercantile Bank, said it never did once-off transactions and saw this as a longterm relationship with Lushaka Investments.
The first phase of Central Square involved the construction of the World Trade Centre building, which was sold to listed property fund SA Corporate in 2013.
The construction contract for the second phase has been awarded to Mota-Engil Africa and construction has already commenced.
Gilberto Rodrigues, the chief executive of Mota-Engil Africa, said the alliance and Central Square contract represented “the rising sun” of its activities in South Africa.
Sergio Aquino, the chief executive of Lushaka Investments, said the company had decided last year that its future strategy involved focusing on being a developer and outsourcing the construction function of all its projects.
Lushaka Investments has been involved in the property market for about 40 years as a builder, but over the past about 10 years has begun building its own developments.
It previously developed the 50-unit residential apartment block Amazonas and the 104unit apartment development Sunset Towers, both of which are in Sandton.
Aquino said as a construction company Lushaka was limited to the Johannesburg region, but with Mota-Engil as a partner it would be able to extend its reach and developments into other parts of South Africa, as well as neighbouring countries.
“The partnership with Mota-Engil will enable us to develop similar projects in the African continent, so it was a great fit to have a partner that could open up avenues that were not available to us before,” he said.
Aquino said the alliance with Mota-Engil and Mercantile Bank and its parent in Portugal, which also owned banks in Mozambique and Angola, would enable Lushaka Investments to enter the African market with confidence.
Third phase
However, Aquino said they first wanted to deliver the Central Square project before expanding to other urban centres, such as Cape Town and Durban, and into Africa.
Aquino believed Lushaka Investments would be looking to expand its operations in South Africa and into Africa simultaneously in about three years time.
Aquino said the third phase of Central Square would be about the same size of the second phase, but possibly also provide some office space, with construction probably commencing in 2017.
He said more than R3bn in value would be created by the three phases of Central Square.
Aquino said 50 percent of the apartments in the second phase had already been sold.
The price of apartments ranges from R2.9m for an 89 square metre one-bedroom apartment to an estimated R40m to R45m for a single 1 200m2 rooftop penthouse.