AN INVESTMENT OPPORTUNITY IN A DIVERSIFIED PROPERTY BUSINESS
May 6 2025 07:00
As South Africa (SA)’s listed property sector recovers amid an easing interest rate environment and the improved domestic economic outlook, integrated international real estate investment business, Burstone Real Estate Partners, stands out as an entry point for discerning investors into a sector that can reward them over the long-term. This mid-cap property play has growth opportunities that are being unlocked by its diversified portfolio and unique business model.
Burstone has created value from properties that have been directly held for some years before adding an asset and fund management model to reach a higher level of return.
“Burstone is an integrated business with numerous facets, which enable it to compete locally and internationally. We have taken years to amass quality direct on-balance sheet investments. To facilitate our strategic re-positioning, we will recycle certain of these investments and use the proceeds to co-invest in fund management platforms, which will result in a significant increase in third party funds under management and higher returns on capital deployed,” says Chief Executive Officer, Andrew Wooler.
The company has its history anchored in the Investec Group, where the Investec Property Fund (IPF) team was spearheaded by entrepreneurial thinkers and investment professionals who spent decades working in commercial real estate across nine countries. IPF was founded in 2008 and listed on the JSE in 2011, before rebranding as Burstone in 2023 following the internalisation of its management functions.
Following this internalisation and the roll-out of measured investment strategies, Burstone has a gross asset value (GAV) of €2.1bn (R42bn) of South African, European and Australian real estate assets and €1.2bn (R25bn) worth of third-party assets under management and is driven by more than 50 real estate professionals.
The Group owns about R14bn worth of SA assets and also has exposure to European countries including France, Germany, Italy, Spain, Poland, Belgium and the Netherlands, as well as Australia.
Hoppegarten, Germany
This is a property business which earns returns for investors from three continents, under one of the most experienced management teams that any South African landlord can boast.
Marseille, France
SKILLED LEADERSHIP
Burstone is an investment for individuals and institutions who are seeking returns from a diversified platform which mitigates risk through owning varied property types and which earns revenue from assorted income streams. The Group’s skilled executives and staff on the ground in each market that it invests in, have strong real estate investment and management experience.
Andrew Wooler, Chief Executive Officer of Burstone
Executive management includes Wooler, who is a highly qualified CEO. Having joined in 2012, he has been instrumental in growing the fund from R2bn of local assets to what it is today. He fulfilled the role of chief financial officer (CFO) from August 2015 to December 1, 2018, before becoming CEO. He brings commercial, corporate finance and property industry experience to the table, and is a Chartered Accountant who previously worked in London and headed up the New Business team at Caesars Entertainment UK, driving profitability and rolling out new business opportunities across Europe, the Middle East and Africa.
Jenna Sprenger, Chief Financial Officer of Burstone
CFO Jenna Sprenger joined the fund in August 2014 and has helped to grow the business since, being responsible for finance, reporting and balance sheet management, and is a strategic partner in all decision making. She is a passionate proponent of Burstone’s modern environmental, social and governance (ESG) strategy. Prior to joining the fund, she was the financial manager at Annuity Properties.
Graham Hutchinson, Chief Operating Officer of Burstone
Graham Hutchinson is Burstone’s Chief Operating Officer (COO). He joined Investec as an asset manager shortly after the listing of Investec Property Fund. Since joining, he helped to grow the SA portfolio from about R1.2bn to circa R14bn. In 2021, he took on the role of managing director for South Africa, and built a best-in-class asset management team across the industrial, office and retail sectors. Prior to Investec, he ran a private property business working on distressed asset turnarounds.
Paul Rodger, Managing Director for Europe
Paul Rodger, Managing Director for Europe was the European Property Director of Hansteen Plc until the €1.5bn (R29.5bn) portfolio’s sale to Blackstone in 2017. Since 2010, he has resided over €6bn (R118bn) of real estate transactions and built best-in-class asset and asset management teams across seven European countries. He co-founded the Urban Real Estate Partners platform in 2017, which was internalised into Burstone in 2023.
Graeme Katz, Chief Executive Officer of Irongate
Graeme Katz is the CEO of Irongate, having joined Investec to head up the Australian real estate business in 2006. Before that he was general manager of investment sales at Mirvac Group. He listed Investec’s Australia Property Fund (IAP) on the JSE in 2013 and dual-listed it on the Australian Stock Exchange (ASX) in 2019. In 2022, IAP was sold to Charter Hall, managing a 287% return for investors since its IPO on the JSE and a 60% return on the ASX since that IPO. Following an internalisation and management buy-out the fund (now Irongate) has accumulated assets over €1.2bn and manages c.A$625m of equity for some of the world’s leading real estate investors.
COMMITTED TO EXPANSION OF THE FUND AND ASSET MANAGEMENT MODEL
Expanding the group’s fund and asset management model offers multiple benefits for Burstone, particularly the ability to achieve enhanced integrated real estate returns. This approach combines traditional real estate asset yields with additional upside from operating a funds, investment, and asset management model, where Burstone can earn management, leasing, and acquisition fees, as well as potentially generate performance fees through outperformance, Wooler explains.
Burstone’s directly held South African portfolio includes 62 properties valued at circa R14bn diversified assets across the industrial, office and retail sectors.
The industrial properties are split between Gauteng and KwaZulu-Natal. They include Benoni Multipark and Alrode Multipark as well as 23 and 25 Nguni Drive; all of which are in the east of Gauteng.
The offices are multi-tenanted low-rise buildings in the core office nodes of Gauteng, which include Rosebank, Bryanston, Sandton and Fourways. These offices include 3 and 4 Sandown Valley, located by Sandton, 2929 on Nicol and Nicol Main Office Park in Bryanston, Design Quarter in Fourways, The Firs and 30 Jellicoe in Rosebank, and 1 Protea Place in Sandton.
4 Sandown Valley Crescent, Sandton, South Africa
The retail portfolio consists of semi-regional and neighbourhood malls in Gauteng, the Western Cape and Free State provinces, with national retailers as the primary tenants. The retail centres include The Neighbourhood Square, Balfour Mall, Zevenwacht and Dihlabeng Malls. Burstone Group also owns the full precinct at Design Quarter, Newcastle Mall and Bloemfontein’s Fleurdal Mall.
Dihlabeng Mall, Bethlehem, South Africa
This unique mid-cap play has chosen to roll out a multi-faceted strategy which includes investing offshore, alone, and in tandem with equity partners so that it can lock in returns consistently through property cycles.
There is optimism that SA’s real estate is at the start of an upcycle following a series of rate cuts and improved confidence in the economy and Burstone is a SA corporate citizen looking to capitalise on this momentum.
A TRANSFORMATION YEARS IN THE MAKING
Why call a fund by this unusual name? A burstone is a hard, siliceous stone which is used to make grindstones. It takes raw grain and works to transform and refine it into flour. Burstone chose the name because of the team’s unique ability of identifying potential and unlocking value in the property sector.
The group has done just this starting in SA, and it is now a landlord owning top-tier assets and serving blue chip tenants. These include banks, legal and insurance firms and tech businesses.
Burstone also made a transformative step in its journey when the company sealed one of South Africa’s biggest property deals in history in November last year, creating a strategic partnership agreement with Blackstone, the world’s largest alternative asset manager. The deal saw Blackstone taking over a majority stake in Burstone’s pan-European logistics portfolio, while Burstone retained a 20% stake in the portfolio and the management of the portfolio.
“The fund and asset management strategy will be an integral part of our future as a business. We have developed investment experience in a variety of countries and have skilled people who are constantly studying markets so that we don’t miss out on the right opportunities, but that we do avoid deals which won’t add value to Burstone and its stakeholders,” says Wooler.
The move to co-invest is not letting up. Last year, Burstone’s Australian joint venture (JV) with Irongate established an agreement with TPG Angelo Gordon, a diversified credit and real estate investing platform within TPG, with approximately US$91bn of assets under management. TPG is a global alternative asset management firm.
The partnership established a new industrial programmatic JV between the parties and has already concluded acquisitions in Australia, expanding Burstone’s industrial and logistics fund management strategy in the country. Burstone, through Irongate, has a 15% co-investment in the programmatic JV and the Irongate JV provides the investment and asset management functions.
In February the JV acquired A$280m of industrial logistics assets in New South Wales and Queensland, deploying approximately A$133m of equity into four assets.
“The JV aligns with Burstone’s fund and asset management strategy, leveraging internal expertise to deliver strong total returns to Burstone and its capital partners. The provision of investment and management capability alongside globally recognised capital partners, enhances the overall return to Burstone and demonstrates the group’s ability to deliver on its stated strategy of expanding its fund and asset management platforms,” says Wooler.
Katz agreed that Australia offers competitive returns as a real estate investment market.
“These acquisitions reflect our confidence in the long-term prospects of the industrial market in Australia. The sector has consistently shown its strength, and we see further potential for growth, particularly for investors who are able to identify undervalued assets in strategic locations,” says Katz.
Burstone has had a 50% interest JV with the management team of the Irongate Group since March 2023. Burstone and Irongate have grown third-party AUM by more than 40%.
A LONG-TERM PLAY FOR INVESTORS
Burstone is in discussions with cornerstone investors to build a core plus fund in SA. It will consider investments and property types that have long-term return potential when managed by experts on the ground, such as the multi-family residential rental sector.
Turning to Western Europe and Poland, Wooler says that the group will gradually expand its exposure to logistics assets.
“Our European exposure is still relatively new compared with how long we have operated as a business. We are pleased with the value we are generating from our assets in places like France, Germany, Italy, the Netherlands, Belgium and Spain,” says Wooler.
Logistics Court Schiphol, Netherlands
Burstone also has exposure to Poland, the largest economy in Eastern Europe with logistics companies that operate across the region. Wooler is not ruling out investing elsewhere on the continent, Wooler tells Property Flash, if the deals fit into Burstone’s multi-pronged strategy.
“This hybrid model of traditional real estate investment, integrated with expertise across fund management, investment management, asset management and development management supports the group’s strategy of delivering enhanced returns on capital deployed and maximising operational leverage from its scalable platform,” says Wooler.
“The world is dynamic and while it may be marred by uncertainty, we find opportunities in this and stick to our strategy which is based on decisions made for the long-term benefit of our clients and shareholders,” he says.
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