A Galetti ON AUCTION signboard hit the headlines this week when a picture started doing the rounds on social media and the team received a perplexed phone from the municipal manager when the sign was incorrectly placed on the well-known Braam Fischer (Glaspaleis) municipality building. “We were soon inundated with calls, but can confirm that this property will not be auctioned and does not form part of the Georgiou portfolio, the property in question is in fact owned by the Manguang municipality.”
However, on 31 August, an upcoming auction will set a new benchmark for Galetti Auction with 42 properties valued at just over R800m coming to market. Spanning student res conversion, blue chip retail, and corporate headquarters to some of South Africas’s largest businesses. 26 of the 42 properties are located in Bloemfontein and belong to the Michael Georgiou private portfolio. The properties are being sold as part of a portfolio restructuring exercise and for part of Phase 1 of the portfolio sale.
John Jack, CEO of Galetti “We specialise in corporate re-structuring and bring a focussed solution to the table for large portfolio sellers. Our business is to find the right solution for the Seller, be it private treaty, sealed bid, or auction each is tailored to purpose. With the first tranche of the portfolio we advised auction would be the best option because it calls the market for all bids and discovers the best price for the properties. The next tranche will be sealed bid given the size of the assets and the lengthy DD required to transact on them.”
The properties are a mix of income-generating properties and development opportunities. “Investors look to the underlying leases to assess the value of the properties on auction. The investors retain the tenants and often upgrade the properties so it’s a win-win scenario,” Guy Dowding Joint MD of Galetti’s Auction Divison adds.
To name a few Landmark buildings on auction:
- Sanlam Bloemfontein HQ
- RTT Logistics Warehouse
- Pepkor Logistics Warehouse
- Honda Dealership
- College Court
- The Tourist Centre
Investors set their sights on residential conversions
Justin Thom, Director of Corporate services at Galetti, highlights the keen uptake by investors for the big ticket items of the day: Student residential conversions. “The cost of building has gone up and residential conversion seems to be the answer. Vacant office blocks located in close proximity to universities and colleges are now being earmarked by investors due to the ongoing student bed shortage. “Earlier this year the Department of Education estimated a shortage of 400,000 beds countrywide.” Potential residential conversions in this portfolio include the Bloem Club Building (4300m2), the NBS Building (3300m2) the Penbel Building (2300m2 ), and the Liberty Life Building (6648m2). “Assets in this range should sell for around R4000 – R5000 per m2.”
Cash retail stores lead the charge
“For investors, it’s all about foot traffic and high-yielding assets such as cash retail stores are continuously in high demand,” Thom adds. One of the properties coming to market is the Fichardt Street complex, located in Bloemfontein. “There’s five buildings on sale, equating to 16000m2. A few of the buildings are sub-leased and there’s the opportunity to convert the flats upstairs into a storage area for tenants.”
Let’s talk logistics
Coming to market in Bloemfontein is RTT, Pepkor and Xeon Logistics, along with a division of HCI. “Three different buildings each with blue chip tenants,” says Guy Dowding, Auction Joint MD. Between these three buildings, there’s an impressive 29, 728m2 of space on offer. “Pepkore Logistics has been a long-standing tenant and the premises are fully kitted out.”
