The Aria Property group, a subsidiary of listed investment holding company Trematon, has acquired a portfolio of properties from Redefine Properties as part of the listed group’s efforts to increase net asset value and deliver value to shareholders.
The R614 million acquisition comprises seven key office, retail, industrial and mixed use assets predominantly across the Western Cape province.
The acquisition will expand Aria’s commercial property portfolio to 21 assets and will add an additional 90 000 m2 of gross lettable area to the portfolio.
The portfolio includes Maynard Mall in Wynberg, Pier Place in Cape Town CBD (formerly the Vodacom head office); industrial facilities in Epping and Paarl, the Edgars Wynberg site; a property in George occupied by Standard Bank and a mixed use complex in Durban, Glenashley Views.
All of the properties with the exception of Pier Place are income producing, says Ilan Kaplan, founder and MD of Aria. “We want to reposition Maynard Mall as the premier shopping destination in the neighbourhood.”
Similarly, Pier Place will be upgraded into a modern office facility, but rentals offered will be highly competitive with what is available. “We plan to undercut rental prices. We have an understanding of the office demand and tenant requirements in the Western Cape,” says Kaplan. “The CBD has come back and there is a limited amount of space of this nature on the foreshore – particularly as many buildings are being converted into residential units.”
This is the second tranche of property that Trematon has acquired from Redefine, which is recycling capital and disposing of non-core assets. In 2014 and 2015, the company acquired Redefine’s North Wharf building on the Cape Town foreshore as well as R200 million worth of commercial property.
“The transaction fits into the Aria strategy of acquiring key assets that are undervalued and allow for significant value unlock by our team,” says Trematon CEO Arnold Shapiro.
Shapiro and business partner Allan Groll have established a reputation for buying poorly performing or misunderstood assets at a discount to net asset value and making something of them.
In 2014 the Aria team redeveloped Northgate Island from a failed and vacant shopping mall into a successful commercial node on the corner of the N1 Highway and Koeberg Road in Milnerton, in the Northern Suburbs of Cape Town.
Since the acquisition will be debt funded, the effect on income will initially be dilutive but management expects that rental income will increasingly contribute to the Company’s profit as the portfolio is redeveloped and retenanted.
Trematon is more than a property play. It has four major areas of operation: Club Mykonos (including a 30% share in the Mykonos Casino), Aria Property Group, Resi Investment Group (residential property investments primarily held for rental) and other investments which include listed and unlisted equities across many industry sectors. The group also has a fledgling education business which, in time, is expected to become the fifth major area of operation.
“This is a chunky deal which increases our NAV and will provide a good internal rate of return,” says Shapiro. “This the first step in a strategy to change the composition of our NAV such that it provides better upside to shareholders.”
The company is still under cautionary.
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