Tenant mix shields CPF's malls

The R3.2-billion Futuregrowth Community Property Fund (CPF), which owns 26 shopping centres in townships, has been shielded to some extent from the recession due to its tenant mix and the lower-income consumers these malls cater for.

James Howard, the portfolio manager of the fund, said on Friday that the fund's policy was that the tenant mix of centres must be 75 percent national chains, 15 percent regional tenants and the rest local entrepreneurs.

"We have seen a lot of churn among these small stores over the last 18 months. Where people have not been able to pay their rent we encourage them to close and cut their losses," said Howard.

The performance of big national chains has meant the losses incurred due to smaller tenants defaulting on rent has been minimal. Howard said the vacancy rate had not exceeded 4 percent.

The shopping centres, which cater for 7 million people, still deliver returns. This is because most centres include stores that mainly sell basics, such as food and building supplies. Howard said retrenchments did not seem to have affected the centres. The fund's shopping centre in Diepsloot, where there is 70 percent unemployment, has the second-best performing Shoprite in the country in terms of turnover growth.

Howard attributed this to the fact that the consumers in these areas were not servicing high levels of debt and possibly the safety net that social grants were providing.

Bridge City mall in KwaMashu in Durban is a new development that the fund bought for R740 million, which is close to completion. The tenant mix has a strong bias toward supermarket and clothing stores, which the fund's research indicated would appeal to the consumers in the area.

The fund will sell 10 percent of the centre to the local community at market-related prices if the local community can raise the finance.

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