In a surprise moveâ€š Investec Bank will buy back its Sandton head office from SAâ€™s largest listed real estate groupâ€š Growthpoint Propertiesâ€š for R2.2bn.
The officeâ€š which lies in the heart of SAâ€™s richest business districtâ€š is set to be upgraded to stand out among other corporate headquarters.
Investec is best placed to ensure the upgrade is done optimallyâ€š says chief financial officer Nishlan Samujh.
â€œHaving been a long-term tenantâ€š we want to be an owner-operator of this iconic office. We have plans to spend capital to make certain changes and believe we understand how to go about it cost effectivelyâ€š so that we can enhance what it offers for our staff and clientsâ€šâ€ said Samujh.
Investec originally sold the propertyâ€š known as 100 Grayston Drive and Merchant Place Parkadeâ€š to Growthpoint Properties in November 2003â€š along with its Cape Town headquartersâ€š for R975m.
Growthpoint was disappointed to let go of Investec as a tenant in Sandtonâ€š where it owns various offices already.
â€œThis is a big asset for us. While the sale is part of a larger disposal processâ€š itâ€™s still the loss of an excellent tenant for usâ€šâ€ said Growthpoint MD Estienne de Klerk.
â€œWe are a large presence in Sandton already and this was a part of it. Howeverâ€š the funds could be used elsewhere in Sandton as we look to strengthen our balance sheet.â€
While Investec does not traditionally own property nor rent it outâ€š the Investec group does have property businesses within it. These include Investec Propertyâ€š which specialises in developmentsâ€š land conversionâ€š private equity and listed property fund managementâ€š as well as the real estate investment trusts Investec Property Fund and Investec Australia Property Fund.
Including the sale of Investec Bankâ€™s head officeâ€š Growthpoint would have sold about R3.2bn worth of properties in the past few months. The two other large sales were that of Hatfield Plaza and Turbine Hall.
De Klerk said Growthpoint was also in talks to sell a R6.5bn property portfolio in the coming weeks. The property fund has been trying to free up some capital as it looks to expand its international presence.
â€œWe want our international business to account for 30% of earnings before interest and tax. Currently about 20% does.â€
Growthpoint owns R4.9bnâ€š or 29%â€š of London Stock Exchange AIM-listed Globalworth Real Estate Investments. This investment has returned â‚¬13.7m (R200m) in distributions in 2017.
At the end of Februaryâ€š Growthpoint Properties reported financial results for the six months to Decemberâ€š wherein it posted distribution growth of 6.5% per shareâ€š matching its guidanceâ€š and growing its asset base to R127.7bn. Similar dividend growth was expected for the full year to June 2018.