Real Estate Investor Magazine South Africa April 2014 | Page 10

PROPERTY ALERTS

Highlights in the property industry
The Good

Major acquisition in listed property company
The Competition Commission gave Growthpoint Properties the green light
to acquire the entire Tiber Group portfolio of properties and management
business as at the end of January 2014. This was the last condition precedent to
Growthpoint concluding its largest single transaction to date of R6.1 billion,
and will see it gaining ownership of one of the most exclusive property portfolios
in South Africa. Norbert Sasse, CEO of Growthpoint Properties, says the
acquisition became effective when the properties and shares were transferred into
the name of Growthpoint. “The real benefits will come through in FY2015 when
shareholders will enjoy the full 12-month impact of the transaction.”
The portfolio spans 320 000sqm of mainly P- and A-grade office space
concentrated in Sandton. It comprises 27 prime properties and a 50% stake in a
further 9 properties. It also incorporates 48 000sqm of undeveloped bulk.
Securing continuity of management and expertise in the transaction,
Growthpoint will internalise the asset management and property management
business from Tiber Projects.

Budget attack on commercial property

The Bad

The South African Property Owners Association expressed its dismay at
comments made by Finance Minister Pravin Gordhan about the commercial
property sector during his budget speech. During the speech the minister
asked of the property industry, “Why aren’t you honest in the deals you make
with government?” Neil Gopal CEO of SAPOA says: “This attack on the
entire property industry is unwarranted and unfortunate. Many of the issues
raised stem from the government’s own inefficiency and mismanagement,”
says Gopal. According to Gordhan, an initiative was undertaken in 2012
jointly with Minister Nxesi and the Department of Public Works (DPW) to
review the validity and cost effectiveness of all government property leases.
The exercise had exposed several deficiencies. These included government
paying for accommodation which is unoccupied or occupied by nongovernmental entities, marked divergences from market rates per square
metre, inappropriate non-competitive procurement procedures, missing or
invalid lease agreements and unsubstantiated payments to landlords.

The Ugly

Early warning, trouble ahead
The final quarter of 2013 saw a worsening in residential rental performance,
marking a worrisome change in tenant payment behaviour for the first time in
nearly three years. This reversal is a sudden change for landlords and property
managers who have been enjoying an unusually long period of improving rental
payments, culminating in Q2 and 3 of 2013 with 86% of tenants deemed to be in
good standing.
While this figure slipped in Q4 2013 to 85%, it is noteworthy that 72% of tenants
remained in the Paid on Time