10-year property investment partnership delivers solid growth

Johannesburg - October marked the 10th anniversary of the property investment partnership between Futuregrowth Asset Management (“Futuregrowth”) and Capital Land Asset Management (“Capital Land”) in the growth of the Community Property Fund (“Comprop”).

In October 2014 Futuregrowth and Capital Land joined forces to reposition and grow Comprop, a flagship fund of Futuregrowth. For almost 30 years Comprop has pioneered investment in township and rural shopping centres, developing and supporting the needs of underserviced communities throughout South Africa. In 2014 the Fund held 17 shopping centres with a combined value of R1.8 billion. Competition in this area of the property market had intensified as institutional investors recognised the growth potential of the sector. The partnership between Futuregrowth and Capital Land was built around a strategic plan for the sustainable growth of Comprop and the effective management of the portfolio.

A decade later this strategy has yielded excellent returns for the investors. The Comprop portfolio is now valued at over R8 billion, comprising 25 shopping centres with a total gross lettable area of more than 438 000m². Comprop has achieved an impressive 10-year annualised return ending 30 September 2024 of 12.4% despite ongoing loadshedding, poor municipal service delivery, COVID-19, the July 2021 riots and generally weak economic conditions. Comprop is now one of the largest specialist property funds in South Africa focused exclusively on the high-growth township and rural retail market.

The Comprop growth strategy has focused on acquiring quality shopping centres with strong income growth potential that deliver essential goods and services in township and rural areas. Key acquisitions in the portfolio include Eyethu Orange Farm Mall (Orange Farm, Gauteng), Heidelberg Mall (Heidelberg, Gauteng), The Crossing Shopping Centre (Mahikeng, Northwest), King Senzangakhona Shopping Centre (Ulundi, KwaZulu-Natal), Murchison Mall (Ladysmith, KwaZulu-Natal), Sam Ntuli Mall (Katlehong, Gauteng), KG Mall (Kwa-Guqa, Mpumalanga) and most recently Boitekong Mall (Rustenburg, Northwest).

The vacancy rate in the Comprop portfolio has decreased from 8.6% in October 2014 to 3.9% in September 2024, as a result of active management and deliberate enhancement of the tenant mix. Additional value has been unlocked through the expansion and redevelopment of Thulamahashe Plaza (Thulamahashe, Mpumalanga) and Motherwell Shopping Centre (Motherwell, Eastern Cape), and the inclusion of Boxer as an additional anchor at several shopping centres.

Management of township and rural property is highly challenging and Comprop has faced many challenges over the years. The Bridge City Shopping Centre (KwaMashu, KwaZulu-Natal), one of Comprop’s flagship assets, was recently reconstructed following complete devastation in the July 2021 riots to create a dominant, superior regional centre and to further enhance and integrate the transport nodes with the centre. This successful refurbishment was recognised by industry peers, with Bridge City Shopping Centre receiving the prestigious Innovative Excellence Award for the Best Refurbishment from the South African Property Owners Association (SAPOA).

The objectives of Comprop are both commercial and developmental. Capital Land has established and implemented a range of corporate social investment (CSI) programmes focused on educational support, sport for youth, community upliftment and community healthcare. These CSI programmes have made a significant impact in the Comprop communities:

• Over 69 000 pairs of school shoes have been donated to scholars through the Barefoot No More Project.
• Over 63 000 portable desks have been donated through the Lap Desk Project.
• 10 bursaries have been awarded to scholars through The Rialto Project.
• Over 400 academic prizes have been awarded through the Academic Prize Programme.
• Over 10 000 scholars have participated in the Cangro Project.
• 7 sustainable community food gardens have been supported and 150 household gardens have been established through the Sustainable Food Garden Project.
• Over 6 000 Memeza personal alarms have been donated to women and the elderly.
• 7 ongoing holiday programmes, in partnership with Sporting Chance, have kept over 15 000 children engaged in positive activity during school holidays.
• 30 local soccer and netball teams have been sponsored with kit and sports equipment.
• 13 clinics have been established in partnership with Unjani Clinic, providing local access to quality, affordable primary healthcare. To date, these clinics have facilitated over 500 000 patient consultations.

A key emphasis is placed on the use of local service providers and local employment. Over 14 800 people are employed at the shopping centres in the portfolio, of which 80% live in the local communities surrounding the shopping centres.

Over the past 10 years, operations in the portfolio have advanced through a compliance driven, technology focused approach aimed at reducing risk and maximising efficiencies. The development of Capital Land’s cutting-edge proprietary software is a differentiator which has further enhanced the management of the Comprop portfolio.  

A commitment to environmental sustainability has resulted in the successful implementation of renewable energy projects, waste management and recycling initiatives. A total of 12 solar energy projects, with a cumulative output of over 14 000 kWp, have been completed in the Comprop portfolio since 2014, contributing to utilities savings as well as reducing the carbon footprint. Notably, a 3.2 MWp, 3.1 MWh hybrid power project was recently completed at Heidelberg Mall. The Battery Energy Storage System (BESS) ensures 24/7 uninterrupted power, significantly reducing total electricity expenditure and offering a compelling value proposition for retail tenants. The optimisation of waste management has also achieved significant environmental benefits including the diversion of waste from landfill as well as the recycling of waste materials.

The performance of Comprop has been recognised over the years at the MSCI South African Property Investment awards and more recently at the South African Property Owners Association (SAPOA) awards:

• The performance of Comprop has be2024 SAPOA Award: Futuregrowth Community Property Fund owned Bridge City Shopping Centre “Innovative Excellence Award for the Best Refurbishment”
• 2019 MSCI Award: Futuregrowth Community Property Fund “Best Performing Specialised Fund for South Africa” and “Best Performing Overall for South Africa”
• 2018 MSCI Award: Futuregrowth Community Property Fund “Best Performing Specialised Fund for South Africa”
• 2017 MSCI Award: Futuregrowth Community Property Fund “Best Performing Specialist Fund Over Three Years”

Smital Rambhai, the Portfolio Manager of Comprop said: “Futuregrowth and Capital Land share the same culture and values, which is one of the key drivers behind the success of Comprop. Both institutions have a high focus on accountability and transparency, which ensures that our investors interests are always put first. What sets this partnership apart from many is that we are excited to make a contribution together, to change South Africa for the better in a meaningful and tangible way.”