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Akani’s R1.1bn acquisition of Nicolway Shopping Centre

Real estate researchers say the property management company has secured a good asset.
Nicolway Shopping Centre. Image: Supplied

Akani Properties’ R1.1 billion acquisition of the 23 000m² Nicolway Shopping Centre, as well as all properties in the Nicolway Precinct, may serve as the group’s flagship given the centre’s location in affluent Bryanston in Johannesburg’s northern suburbs.

The unlisted group says the purchase was made on behalf of its client, the Municipal Employees Pension Fund (MEPF), with the transaction approved by the Competition Tribunal in December.

“The shopping centre is well located in terms of access and visibility on [William Nicol Drive] in the heart of Bryanston and it’s strategically located in a LSM [high living standards measure] area surrounded by the Bryanston commercial node,” Akani said in a statement.

The group also noted that the acquisition not only includes the Nicolway Bryanston Shopping Centre, but the Decathlon retail component (a sports hub concept located in the Nicolway precinct) and a office building known as Nicolway West.

“The acquisition includes all rights in the leases of all properties and all other assets necessary for the carrying out of the business enterprise,” the statement noted.

First National Bank (FNB) commercial property finance economist John Loos projected that the office property sector will remain in the negative territory in 2022 “as many companies revise their office space needs down” during the bank’s quarterly property market briefing late last year.

Read: Akani Properties makes R600m investment in mall developments and renovations

Despite this projection, Akani said: “The office node is showing strong growth and is likely to expand over the next 10 years. Large volumes of traffic use the William Nicol off-ramp from the N1 as their access into and out of Sandton, Africa’s largest financial services hub.”

Property market researcher Dr Dirk Prinsloo tells Moneyweb he believes this is the company’s flagship.

“Based on the location and the asset itself, I think it’s a very good asset to acquire … [as the] Northern suburbs of Johannesburg are very affluent sections of the market,” he says.

“The various classifications of shopping centres is very important to take into consideration when looking at the performance and the potential future performance of a specific shopping centre.

“Regional and super-regional centres might come under pressure a little bit [but] it depends on the location and the economic factors of that specific centre. But if you look at Nicolway, it’s more a community type shopping centre that has a number of different roles and functions.”

Prinsloo added that super-regional shopping centres such as Menlyn Shopping Centre will experience some vacancies going forward due to not having enough tenants to fill up the space. However, community-type shopping centres don’t use that much space in terms of their footprints for their retail outlets.

Head of research and business development at Anchor Stockbrokers Craig Smith says: “Convenience or community type retail formats – which I’d bucket Nicolway under – have performed well on relative basis versus other retail property types over the last 18 to 24 months.”

“They are also acquiring [a] stake in the broader precinct too which I think is important as [it] allows them to manage the various components and ensure it is an attractive destination.”

According to Akani Properties’ managing director Zamani Letjane: “The acquisition of Nicolway demonstrates the group’s optimistic view on the recovery of the SA economy from the effects of the Covid pandemic.

“We are also seeing a shift from large shopping malls to small convenient shopping centres – a growing trend that presents growth opportunities for our property portfolio.”

Letjane adds that the Nicolway acquisition will greatly improve the company’s balance sheet and income stream as the transaction is underpinned by quality tenants with long-dated leases.

Palesa Mofokeng is a Moneyweb intern.

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