Sale bolsters fund’s property portfolio
ESKOM Pension and Provident Fund (EPPF) has sold its 60% stake in property company Pareto for R6,8bn to the Government Employees Pension Fund (GEPF) via the Public Investment Corporation (PIC), which invests on behalf of public servants.
Last week, the Competition Tribunal approved the GEPF’s acquisition of the remaining 60% of Pareto and Business Venture Investments (BVI). As at the end of December last year, Pareto and BVI had a combined gross asset value of R13,6bn. The transaction would result in Pareto and BVI being wholly owned by GEPF through the PIC.
The property portfolio comprises ownership interests in 10 shopping centres: 25% of Sandton City complex; Tyger Valley Shopping Centre in Cape Town (57,50%); Cresta Shopping Centre in Johannesburg (100%); and the Pavilion Shopping Centre in Durban (100%).
Also included are Westgate Shopping Centre in Johannesburg (56,18%); Southgate Shopping Centre in Johannesburg (67,42%); Southgate Value Market in Johannesburg (64,98); Mimosa Mall in Bloemfontein (100%); Menlyn Shopping Centre in Pretoria (50%); and Cavendish Square in Cape Town (50%).
PIC CEO Elias Masilela said the acquisition was in line with the corporation’s mandate and goal of investing 5% of the GEPF’s assets under its management in real estate assets.
"The transaction places the best retail property portfolio in SA firmly in the hands of members of the GEPF. This will ensure they enjoy the superior returns and capital growth associated with owning assets of this nature."
Mr Masilela said the transaction also allowed the PIC to attain its desired level of balance across the different retail shopping centre sectors, which included the 29 township retail shopping centres in which the GEPF had invested.
"Beyond the financial desirability that the increased investment in Pareto and BVI brings, its commitment to corporate social investment, sustainability principles and excellent governance profile also contributed to its appeal for the PIC."
Although the partnership between EPPF and PIC was fruitful and saw Pareto and BVI grow its regional and super-regional shopping centre portfolio with the acquisition of Mimosa Mall, 50% of Menlyn Park and 50% of Cavendish Square, regulation 28 of the Pension Funds Act had compelled EPPF to reduce its exposure to real estate.
However, the settlement of the purchase price in cash and via an asset swap had allowed EPPF to bring its portfolio into alignment with regulation 28.
EPPF CEO Sbu Luthuli said while exciting, it was also "emotionally" hard to let go of Pareto.
Author: THABANG MOKOPANELE
Article Source: www.businessday.co.za