The properties are the Meadowbrook Distribution Centre in Edenvale, 8 Industry Road in Kempton Park, 10A Cleveland Road in Cleveland, 320 Kuit Street in Pretoria, Route 21 Industrial Park in Irene, the Pick n Pay Distribution Centre in Pinetown, Nampak in Pinetown, and Arrowfield in Pinetown.
The transaction, which is worth R375m, provides Tower with its first significant exposure to the industrial property sector and will see Tower raise its exposure from 0.9% to approximately 12% - well on the way to the 20% overall target.
The properties fetch rentals of up to R65/m² and the largest property is 15,500m² in size.
This latest acquisition takes Tower's property portfolio to 44 properties valued at R3.5bn. Marc Edwards, CEO of Tower, says the purchase of these eight industrial properties is in line with the fund's strategy of growing its asset base with well-located and diversified properties throughout South Africa.
"Despite challenges such as sluggish economic growth and unstable electricity supply, certain nodes of the industrial sector are strong," says Edwards. "According to a recent IPD annual South African property index, the best performing sector was industrial, and although the commercial property market is still under pressure, the sector is still yielding attractive returns for investors."
Tower has been on an acquisition drive and in addition to the deal with HBW, also recently purchased 15 Wellington Road in Parktown for a sum of R80.5 million, Evagold Shopping Centre for R110m in Evaton, Gauteng, Link Hills Shopping Centre in Kwazulu-Natal for R217m and VMD KVART, Block B - an office property located in Zagreb in Croatia, for €23.7m - this being the first off-shore property purchased by Tower.
"These recent acquisitions are pleasing as they provide strong and secure cash flows to the fund," says Edwards. "Whilst growth in size is not the main goal, it does allow us to diversify our risks in certain sectors of the market which have been under-performing. The fund has grown in total value from R1.6bn on listing to approximately R4bn today. This represents growth in size of 150%. At the same time the company has sold and is selling some smaller, non-core properties which results in a more sustainable and attractive portfolio for investors."
