Arrowhead Properties today announced that it has reached an agreement with Sasol Pension Fund for the purchase of the Sasol Building located in Rosebank.
The acquisition is valued at R250 million, of which R125 million will be paid in cash and the balance in an allotment and issue of 9 259 260 Arrowhead A and B linked units respectively.
“This building is an extremely attractive addition to our portfolio,” explains Imraan Suleman, CFO of Arrowhead Properties. “It will enhance the overall quality of our portfolio and, at a forward yield of 15%, brings strong income returns and long term capital growth.”
Unless the lease is extended, Sasol will be vacating the premises at the end of the lease term in December 2016. Arrowhead is confident that the building is highly lettable, and have compensated for any negative reversions with a high initial yield.
“Notwithstanding the size and quality of the building, we believe that the Rosebank office node is reviving. There are a number of exciting new retail and office developments in the area which are well supported by the growing surrounding residential nodes and the Gautrain station. It is fast becoming the city’s third high-rise business centre after Sandton and the inner city,” concluded Suleman.
The transaction is subject to competition commission approval and Arrowhead expects the effective date to be 1 February 2014.