You can also listen to this podcast on iono.fm here.
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Welcome to The Property Pod, South Africa’s premier property investor podcast. On this weekly Moneyweb show, we gain insider insights from leading executives, analysts, developers and entrepreneurs in the country’s dynamic property industry.
In this episode, the final instalment in our Women’s Month series on leading women in SA property, we have an executive from a JSE-listed real estate investment trust (Reit) on the podcast. She is Kim Pfaff-Karg, the chief investment officer of Cape Town-based Spear Reit.
Spear is regionally focused on investing in the Western Cape commercial property market. Pfaff-Karg has been with the group for a number of years and shares her story, as well as some of the latest developments in the group.
Highlights of her interview appear below. You can also listen to the full podcast above or download it from iono, Spotify or Apple Podcasts.
Northpoint Logistics Park, situated in the Brackenfell R300 industrial precinct – one of the properties that’s part of Spear’s R1.1bn Western Cape portfolio acquisition from Emira Property Fund. Image: Supplied
Highlights
Tell us how you got into the property industry. Where did you grow up, and what did you study?
“I’ll take you back right to the beginning. I was born in a very small, beautiful town called Wilderness. It’s just outside George in the Western Cape. I grew up there with my mother, father and brother David.
“My dad was in property, so it’s no surprise that as I was entering my studies at UCT in business science he had a strong hand in redirecting me to the Property Studies curriculum and degree …
“And that’s where I graduated in 2005.
“I started my career in Cape Town at Broll Property Services. I was advised to start my property career in valuations, as valuations is such a great grounding for anybody who’d like to be in the property industry. I ended up moving to Broll in Johannesburg a couple of years later, to go and see the bright lights of Johannesburg, where I ended up doing my board exam to become a professional valuer.
“I continued with my valuation path because I really, really enjoyed it. I ended up valuing for most of the listed Reits, in fact, and I specialised in shopping centres, which was quite an interest for me. I also completed my RICS [Royal Institution of Chartered Surveyors] accreditation, which is the international valuation accreditation. Later on, I moved to a company called Jones Lang LaSalle.”
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“Many years later I moved down to Cape Town to come back to the Mother City. I ended up joining an investment house called Baker Street Properties. It’s a brokerage in Cape Town, and I started with the investment sales division, where I was involved in selling properties between buyers and sellers, and particularly between Reits.
“A couple of years later Quintin Rossi, the CEO of Spear, approached me and asked if I would like to join the Spear as the chief investment officer, which I was delighted to do.”
Spear Reit’s share price
So you’ve been at Spear for a few years, always as the chief investment officer. Since this is a Woman’s Month profile of sorts, what is your take on women empowerment in corporate South Africa, and perhaps in particular the listed-property sector?
“I’ve always been a very big supporter and advocate for women’s empowerment. I believe it is very important for women to have a career, not only because it’s fulfilling, but also because it creates financial independence for a woman, and that really does give you the freedom to choose.
“In terms of the listed property sector, yes, it’s very much a male-dominated career. However, in many aspects of property – especially the more administrative career paths in property, for example, leasing and property management – there are many women.”
“But in terms of sort of C-suite and executives, you don’t see as many women, although there are some who are making great strides. For example, Amelia Beattie, Bronwyn Knight, Jackie van Niekerk and Sakina Nosaka, all very much leading from the front.”
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What advice would you give young women wanting to get into the property industry and wanting to become a successful executive of a JSE-listed company?
“I think the most important thing if you’re considering going into property is to know yourself, to know what your strengths are, and also to know what you enjoy.
“The property industry is so varied, there are so many facets to it. There are various career paths within property, and it’s really about finding your niche. I do believe that there is no alternative to working hard. You need to work hard, work consistently, be consistently good, find your niche and become an expert in that area.”
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Turning to Spear Reit now, I know the group is heading into a closed period shortly at the end of August, but how is the group doing and what does your role entail as chief investment officer?
“So Spear is doing very well and you’re right, we are about to go into a closed period. We have been very fortunate in that we own assets only in the Western Cape. The property market has been tough over the last couple of years, especially with interest rates remaining high. But we do believe we are going into a period of positivity.
“We believe interest rates will come down soon, and the Western Cape really has the strongest fundamentals in the property market in South Africa. So we have been well protected [here].”
“In terms of my role at Spear, I am a member of the Spear executive team. I play a strategic role across many areas in the business. However, I’m essentially responsible for the formulation and execution of the acquisitions and disposal strategy for Spear.
“I also get involved in any developments that we have on the cards. We have a lot of available bulk across our 29 assets. So that means we can develop specific properties. And because I’m a professional valuer I also get involved or I undertake the internal biannual valuations for Spear.”
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Can you share some of the Spear developments underway before we get to the recent acquisition from Emira Property Fund of the R1.1 billion portfolio in the Western Cape?
“We are very excited about our development in George. It’s on a 7.7 hectare piece of land which is very well located directly opposite the George Airport. We are planning on developing a modern light industrial park there, and we are looking at developing around 30 000 square metres there.
“We are not speculative developers. We will develop only once we have suitable users. At the moment we are inundated with enquiries.”
“We have various portions there, [where] we are looking at consolidating the right users in order to commence with our first structure, which will probably be early next year. At the moment we’re just putting in all the bulk services and the infrastructure.
“We also have, in Paarden Island, just across Marine Drive – so you have uninterrupted ocean views – four properties which are earmarked for development, a 52 000 square metre mixed-use development, which will have a strong residential component. And we are currently in discussions with a best-in-class residential developer to jointly commence with Marine Place …”
Listen/read:
Emira building a ‘war chest’ for further offshore expansion
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Just to conclude, one of the bigger announcements earlier this year was Spear’s acquisition of a R1.1 billion portfolio in the Western Cape from fellow JSE-listed Reit Emira Property Fund. I would gather that as CIO you would have played a key role in this deal. Can you share some insight on the deal and give us an update on where things stand and why you acquired the properties?
“Yes, certainly. I was very involved in this transaction. It has been a very long process, being a portfolio of 13 assets. It started around this time last year. I remember putting in all the numbers and working very closely with Emira. I must say that they were absolutely fantastic in the whole process – from start to end.
“Also, in terms of the due diligence, we had many consultants who were involved in the project and I was involved in the coordination of that, as well as the presentation to many investment committee and board meetings to agree on the terms and conditions of the transaction. We had a couple of conditions precedent, which have all been met.”
Read: Emira sells R1.1bn Western Cape portfolio to Spear Reit
“So that means that at the moment the deal is unconditional, and we are currently in the transfer process, just waiting for some electrical and water certificates of compliance. Once we have all of those, as well as a couple of the other details that need to be done to register properties, they are likely to register or transfer to Spear towards the end of November, early December, and we are looking forward to stabilising those assets into our portfolio.
“The reason that we acquired them is because they are a perfect fit for the Spear portfolio. In terms of composition, we are a diversified portfolio, so we’ve got offices, retail and industrial; and the composition of the Emira Western Cape assets [is] very similar.
“They’re also similar-quality assets and very well run, all in the city of Cape Town. So very much aligned with our strategy. It has really allowed us to upscale in one go as opposed to buying assets piecemeal …”
Listen to the full interview here.
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