Real estate investment trust (Reit) Emira Property Fund has invested in its fourth shopping centre in the US.
The company has undertaken its fourth equity deal in the US with its in-country partner, the Rainier Group of Companies, by acquiring 49 percent of the equity of Indiana-based Stony Creek Marketplace, a dominant shopping centre valued at $32-million.
Stony Creek Marketplace is a 204 000 ft2 modern convenience retail centre located in Indiana, near two of Emira’s existing investments in Ohio.
The centre is in the Indianapolis metro area, which, according to CNBC’s America’s Top States for Business 2017, ranks very highly among the best places for business in the US and boasts a low unemployment rate of 3.1 percent.
Stony Creek Marketplace is shadow-anchored by a 162 000 ft2 Meijer grocer, which forms part of the overall centre but is owned by the grocery chain.
Construction of the centre was completed in 2005 and it has since been regularly refurbished. The property is 98.9 percent leased with 79 percent of its space let to nationals including TJ Maxx, Home Goods, Best Buy and PetSmart. It has a weighted average lease expiry of 3.9 years.
The investment represents a cash-on-cash return of 11.7 percent in dollars for Emira, with a net cash equity investment of $6.5-million.
The investment was funded from Emira’s existing balance sheet, chiefly with the proceeds of its programme of asset disposables from its portfolio rebalancing plans.
This deal takes Emira’s exposure to the US to three percent of its total assets and its international exposure in developed markets to nine percent of total assets.
“With this transaction, Emira benefits from growing exposure to the attractive value available in the US in our chosen market segment. We have targeted investment in grocery-anchored convenience retail centres in resilient markets located in some of the major southern and central states,” commented Emira CEO Geoff Jennett.
He added that the company is confident that its low-risk co-investment strategy in the US remains the most prudent way to increase its international diversification into this developed market.
Meanwhile, in South Africa, Emira continues to recycle its capital by disposing of certain assets in accordance with its portfolio rebalancing plans.
In the calendar year to date it has sold and transferred three assets for a combined R250-million.
This adds to the strategic impact of the six disposals made in the latter half of 2017 amounting to R236-million.
These transactions, Jennett added, continue to deliver on Emira’s strategic thrust to rebalance its portfolio and reduce its exposure to offices.
In addition, Emira has achieved disposal prices at an average premium to book value, which signals that its properties remain fairly valued in line with its robust financial management approach.