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Africrest merges with StandOut to Unlock Value in Investments

Design District, Rosebank- a hub for creative companies- a striking Africrest building.
Design District, Rosebank- a hub for creative companies- a striking Africrest building.

The merger of Africrest Properties and StandOut Properties has been some time in the making as the two companies have been purchasing buildings together over the last 3 years. Africrest has doubled its portfolio size in the last two years by predominantly growing its office portfolio in the northern suburbs of Johannesburg. This growth can be attributed to a few factors.

One major factor being their “Tenant Profit Share Model” where Africrest will source and purchase buildings for larger tenants. Using this model tenants receives a free profit share in the building while paying a market related rental. It is a scenario for tenants whereby they have the advantages of owning a property, but have no responsibility for the asset other than paying the rental on a timely basis. This is an ideal opportunity for tenants to leverage off the extensive experience, network, balance sheet and property management ability of Africrest and take part ownership in a property.

“Tenants can use their money to grow their business while still having ownership in the property” says Justin Blend, co-founder of Africrest. Another notable factor to Africrest’s success is the relationship that Africrest has established and maintained with their primary funders, Futuregrowth. “When your funders understand the way you do business and keep a close eye on the way the business is run it makes the funding process a lot smoother”, say Nicholas Katsapas, co-founder of Africrest Properties.

In just under 4 years StandOut have accumulated 17 properties. Their focus has been on lower to middle income residential buildings as well as B and C grade office buildings and they have built a solid skill set for acquiring, redeveloping and managing this type of asset. StandOut also have a strong in-house property management team which has been built from scratch and can also boast vacancy rates of below 1% and a bad debt ratio of below 0.2%.

“Getting the in-house property management up and running was our biggest challenge, but now is one of our biggest strengths”, says Grant Friedman, co-founder of StandOut Properties

Both companies have excelled in their respective fields in terms of asset growth and property management. The combined staff compliment of the property management team will exceed 25 staff and will at the very least maintain the low vacancy rates which are currently below 2% and also ensure that the properties are maintained to the high standard required.

As part of the merger, StandOut brings its development pipeline of two sizable residential developments in Bramley and Milpark. Greg Blend, co –founder of Standout Properties says “these two developments will not only bring an additional 600 residential units to the existing 350 units in the portfolio, but will also make us one of the largest developers along the Corridors of Freedom”.

The new merged entity will control assets of just over R1 billion. With the combined skill set of the partners in terms of identifying, acquiring and extracting value through development, redevelopment and efficient management of property assets. The merged group will trade under Africrest Properties and Africrest Residential.