Wrap Text
Emira launches USA real estate investment strategy
EMIRA PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2014/130842/06)
JSE share code: EMI ISIN: ZAE000203063
(Approved as a REIT by the Johannesburg Stock Exchange)
("Emira" or "the Company")
Emira launches USA real estate investment strategy
• Emira will hold 49% in a risk-mitigating investment partnership with US major equity holder
• The investment strategy will increase Emira’s international diversification from 6% to 8%
• Investing in grocery-anchored convenience shopping centres in the United States
• Initial deal concluded for ZAR112m (USD8.4m)
• Further committed of ZAR178m (USD13m) is earmarked to invest in its initial assets
• Initial investment and commitment funded by existing sales and debt capacity
• Visibility on attractive transaction pipeline
Emira Property Fund today announced that it is pioneering USA property investment for the South
African investment market. Emira’s new USA investment strategy, to be undertaken with its strategic
US partners, will focus on grocery-anchored convenience retail centres.
Emira is already internationally diversified, with 6% of its income derived from its investment in ASX-
listed Growthpoint Properties Australia (GOZ). Its USA investment strategy will see this quickly grow
to an overall 8% with potential to expand to at least 10%.
Geoff Jennett, CEO of Emira Property Fund, comments: "GOZ has been a phenomenal investment for
Emira for many reasons and, building on this, we have targeted further international diversification in
developed markets. Having considered several investment destinations, we identified the USA as
being the best fit for us. It is the primary first-world market and the USD is the world’s benchmark
currency. As the biggest market in the Western world, it is extremely solid and well diversified, plus
we see attractive value in our chosen segment."
He adds: "We like what we see in this market and believe our USA investment strategy is prudent, risk
mitigated, recession resistant and will offer good returns. We have committed ZAR290 million to our
initial investment in the USA, which is only about 2% of our total assets. We can comfortably fund this
from our own balance sheet and furthermore we can take advantage of access to relatively cheap, in-
country, long-term debt finance. We believe this is an intelligent investment model. It will earn Emira’s
stakeholders USD-denominated double-digit returns of around 10.5% per annum, compared with the
single figure yields achievable in South Africa. This stands to be even higher in ZAR terms."
Key to its USA investment strategy, Emira will co-invest with Rainier Companies, a Dallas, Texas-based
investment and real estate business, which is headed by Texan J. Kenneth Dunn, its co-founder and
principal. Rainier shares strong synergies with its South African counterpart. It is driven by a small
entrepreneurial team and has built a successful 15-year track record as a skilled real estate investor
and asset manager. Rainier currently has more than USD1.5 billion property assets under
management.
Where opportunities meet predefined investment criteria, Emira and Rainier will partner on a 49% to
51% equity basis, respectively, at the individual property level. Emira will hold its investments through
a USA based subsidiary, managed by in-country fund manager Continuum Investments LLC, based in
Dallas, Texas, which is headed by CEO Rick Makin, a USA-based South African entrepreneur. In fact, it
was Emira’s relationship with Makin and business partner Alan Burrow that placed it in the exclusive
position to take advantage of this opportunity.
"Our partners, Rainier, have a wealth of experience and local market insight, as well as an existing
investor base. As the major equity partners they are putting up their own money, and we are confident
to invest alongside them. In addition, Makin and the in-country Continuum team will be Emira’s feet
on the ground. We are comfortable that our co-investment strategy mitigates the risk of our entry in
this offshore market," says Jennett.
By investing in this way, Emira and Rainier will assemble a tailor-made investment portfolio to suit the
co-investors’ unique investment objectives. It has identified certain states in the US, including some
of the major southern and central states, which have meaningful GDP growth rates, as the target
territories for its investment. Also, it has identified grocery-anchored convenience shopping centres,
around 5,000sqm to 40,000sqm in size, as its asset class of choice.
Already, two quality assets have been identified for investment, and the first deal transferred in
October 2017. Emira hence owns a minority equity stake in the Belden Park Crossings shopping centre
in North Canton, Ohio, for which it paid ZAR112 million (USD8.4 million). The centre is well tenanted
and this first deal includes lead co-investor Stark Enterprises, which is a well-known and respected US
retail property developer and investor. The second asset that is already under contract is situated in
Texas.
Jennett confirms that convenience retail is a safer and familiar property asset class for Emira. The type
of shopping centres it is targeting in the US are supported by people buying their everyday basics. This
makes them more resilient through different economic cycles, which also mitigates risk for Emira.
Further, the chosen states offer immense opportunity, with growing economies and populations,
which together with low unemployment rates, support consumer spending.
"We believe our co-investment model is a prudent strategy to increase our international diversity
while mitigating the risk of investing offshore. In addition, investing in developed markets fulfils our
mandate as a diversified REIT," reports Jennett.
Emira is a medium-cap diversified JSE-listed REIT invested in a quality balanced portfolio of office,
retail and industrial properties. Its assets comprise 135 properties valued at ZAR13.3 billion. Emira is
also internationally diversified through its direct interest in GOZ valued at ZAR901 million.
/ends
Bryanston
31 October 2017
Sponsor
RAND MERCHANT BANK (A division of First Rand Bank Limited)
Date: 31/10/2017 05:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
