Property Flash


While traditional retail including the plethora of shopping malls across SA have started to underperform as people’s lifestyles change and as technology changes how we shop, township centres are very lucrative.

Recently, The Township Real Estate Investment Summit was held in Thembisa, Ekurhuleni. Numerous retailers, analysts and other influential people from the sector took part in advanced debate. They spoke about how township retail centres are attracting capital and growing, and how to maintain this momentum they need to serve more customers and to deliver new offerings. they also need to be safer and managed such that hey can operate during rolling blackouts.

Jason McCormick, CEO of Exemplar Real Estate Investment Trust (Reit), spoke at the conference where he explained that township retail is a fast-growing and increasingly competitive asset class.

He said even in a difficult economy, rural and township malls continue to perform well. These malls provide the needs of essential and convenient retail, serving millions of people and their communities. He wants to see the offerings at township malls improve even more. Exemplar is a JSE-listed real estate investment trust (Reit) and the only listed SA fund that owns rural and township retail centres exclusively. It owns 23 retail properties in five provinces including Mall of Thembisa, which was opened at the height of the Covid-19 pandemic in 2020. The Mall of Thembisa is one of the most popular shopping centres in the east of Gauteng.

Exemplar opened two new malls in October with another being developed. These malls are all under 20,000m2. They include the Mamelodi Square in Gauteng and KwaBhaca Mall in Mt Frere in the Eastern Cape. Bizana Mall in the Eastern Cape is scheduled to open on December 1. The estimated value of Exemplar’s shareholding in these three malls is R560m.

Exemplar is also rebuilding Edendale Mall after it was damaged in the July 2021 riots. The first phase of the rebuild opened at the end of August 2022. Phase two will open later this month and the third and final phase in March 2023. The malls’ tenant base is 80% local.

Exemplar is, however, one of the least liquid Reits on the JSE. It initially listed for the tax benefits enjoyed by a Reit. Reits pay out at least 75% of their distributable income as dividends, which are taxed in in the hands of investors and not the company. It is starting to attract more capital.

Township shopping centres have a higher dependence on food anchor tenants and other essential services. This enables them to trade through boom and bust periods and unusual crisis events such as pandemics.

Other landlords with exposure to township retail, include Acsion, Fairvest and Safari Investments. It is an exciting space with impressive growth potential.

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