South Africa's largest REIT Growthpoint joins forces with Investec and IFC to invest in African real estate

Growthpoint Properties, South Africa’s largest REIT and a JSE ALSI Top 40 Index company, has entered a joint venture with Investec Asset Management, in partnership with the International Finance Corporation (IFC), to make real estate investments in several African markets outside of South Africa.

Growthpoint has entered a 50/50 joint venture with global investment management firm Investec Asset Management to form a new management business, which will establish and grow a significant diversified pan-African (excluding South Africa) third-party institutional real estate investment vehicle.

In addition to Growthpoint’s 50% direct stake in the manager, Growthpoint will invest an initial $50 million in the vehicle, with IFC investing $40 million as an anchor investor. IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries.

With knowledgeable local teams and offices in 22 African countries, IFC will also provide valuable on-the-ground advisory services as a local partner for the vehicle in line with its mandate.

The $90 million commitment from Growthpoint and IFC, as anchor investors, is part of a targeted $500 million that will be raised for this institutional investment vehicle. The additional capital will be raised from qualifying, sophisticated third-party institutional investors, both local and international. The vehicle will not be open to public investors. However, there are plans to potentially list the vehicle on a major stock exchange within the next five to seven years.

Norbert Sasse, CEO of Growthpoint Properties, said: “Our African strategy has been in the making for some time. We needed the right partners and expertise to create a powerful platform for pan-African property investment. Growthpoint is thrilled to embark on this venture with Investec Asset Management and IFC to build this into a significant business accessing investment in income-producing pan-African real estate, to benefit shareholders and investors.”

The venture leverages the extensive industry, geographical and investment expertise of its partners.

“We believe this model represents a suitable, compelling investment strategy for Growthpoint to access opportunities in African real estate markets. This undertaking allows Growthpoint to further diversify its assets and harness opportunities across the African continent to create sustainable value for our stakeholders,” added Sasse.

Growthpoint owns and manages a diversified portfolio of 471 properties in South Africa, 53 properties in Australia through its investment in Growthpoint Properties Australia (GOZ) and a 50% interest in the properties at V&A Waterfront, Cape Town. Growthpoint has consolidated property assets valued at over R100 billion ($7 billion).

John Green, Head, Global Client Group at Investec Asset Management, said: “We believe the African real estate markets are well positioned for a long-term growth phase given the significant supply deficit across the continent. We are excited about this unique partnership as it brings together our pan-African investment experience with Growthpoint’s industry-leading property investment expertise and the IFC’s deep knowledge of the continent.”

Investec Asset Management is one of the largest specialist third-party investors in private equity, credit, public equity and sovereign debt across the African continent.

The senior management team of the new venture has a combined experience of 30 years in real estate and investment on the African continent. The team will be led by Thomas Reilly, former CEO of Sanlam’s Africa property fund business. With a long history in investment banking, Reilly is also widely respected for his commercial real estate knowledge, his African property investment experience, and his work in multiple African markets.

“This venture provides a significant opportunity to facilitate the growth and liquidity of real estate as an asset class across the continent,” said Reilly.

The new pan-African real estate vehicle will initially target investment in select African countries in East, West and Southern Africa, including Namibia, Botswana, Mozambique, Zambia, Uganda, Tanzania, Kenya, Nigeria, Ghana and Morocco.

About 80% of the vehicle’s portfolio will consist of income-producing real estate assets. Around 20% of the portfolio will be earmarked for new development. The vehicle will invest across a range of commercial property subsectors, including retail, offices, industrial and hospitality.

Source: Growthpoint Properties • Home