Turning over a new Leaf

Black River Park in Observatory

One of South Africa’s real estate funds Redefine Properties last month swooped on prime Cape Town office park assets. The company announced the R4,1bn acquisition of the Western Cape-based property portfolio belonging to specialist investment company Leaf Capital. The portfolio will offer Redefine an initial income yield of 8%, substantially enhancing the property giant’s office portfolio in the Western Cape.

The forecast net income from the Leaf properties is R287m for the year to end February 2016. This figure includes the contribution from several properties that Leaf owns in Gauteng.

Leaf Capital was established in 2004 by former banking executive Paul Leaf-Wright. The company started as a financial advisory firm that focused on serving organisations operating in the mid-cap markets, but broadened its sphere of operations to property and private equity.

Redefine executive chairman Mark Wainer said that acquiring Leaf’s ‘trophy’ portfolio was a strategic triumph for Redefine.

“It is underpinned by high-quality income streams from its large, excellently located, premium grade office precinct assets.”

He pointed out that the transaction included a number of significant properties such as Black River Park in Observatory, the Wembley Square development on the edge of the Cape Town CBD and the Boulevard Office Park in Woodstock.

“These assets change the face of our Western Cape portfolio, which will now include the top 5% of quality office blocks in Cape Town.”

The properties benefit from strong lease covenants and quality tenants – including Amazon, Medscheme, Dimension Data, and the Green Building Council of SA. Leaf’s properties have maintained a tenant retention ratio of 82% (94% excluding buildings earmarked for refurbishment.) In addition, Wainer noted the portfolio offered future additional development potential – notably developable bulk at Black River Park.

Redefine has a strong presence in the Cape Town office market, owning well-known buildings in the CBD like Thibault Square, the Convention Tower and the Standard Bank Centre. Smaller Western Cape office properties include Knowledge Park, Heron Place, Parliament Towers, Wynberg Mews and Commissioner House in Bellville.