Unlisted logistics-focused property group Improvon is on a major expansion drive, with several developments underway both in South Africa and other sub-Saharan countries like Kenya and Zambia.
The group, which has a current property portfolio worth around R9 billion, recently launched a new R1.3 billion warehousing development dubbed the Dakota Precinct, near Rand Airport in Johannesburg.
A co-investor in the project is Nedbank Property Partners, which is part of the Nedbank Group, SA’s largest commercial property financier.
In this latest episode of The Property Pod, Improvon CEO Stefano Contardo tells us more about the group’s latest development and gives us insight into the growth of the company which was established in 1994.
Highlights of his interview appear below. You can also listen to the full podcast above or download it from iono, Spotify or Apple Podcasts.
“Improvon was founded back in 1994 by four brothers [the da Costa family], and over time just continued to be focused purely on warehousing distribution property in the South African space … We’ve now expanded into sub-Saharan Africa and have developments in Zambia and in Kenya.”
“One of our major strengths is [our] ability [to] combine our construction development, management [and] administration sides of the business to develop and build our own funds … Over many years, we’ve obviously built up a substantial number of buildings and then recycled and sold off and built new buildings.
“We currently sit with around 120 tenants in the portfolio, in excess of 680 000 square metres in the South African landscape of lease tenanted income-yielding properties, and quite a substantial portfolio which is purely warehousing distribution.”
“I think one of the interesting things that stands out about it is, because of our sole focus and dedication to that sector [warehousing/logistics properties] over time, we’re probably one of the purest warehousing distribution-focused portfolios or funds in the country.”
Expansion beyond SA
“We looked at the ability to grow in the South African context, the South African landscape, and we’ve tried to translate that into the sub-Saharan market space; and we’re seeing good momentum building, especially in Kenya.”
“We’re in Nairobi. We have a 40-hectare park there and we are busy starting to develop and roll that out, creating a similar A-grade quality warehousing/distribution logistics park.”
“Over the years we’ve developed in excess of a million square metres of space, so the number is probably substantially more in terms of what we’ve developed.”
“Property is a factor of time and, especially in our space now in sub-Saharan Africa, it’s also a factor of exchange rates. So, depending on the day, the value of the portfolio fluctuates, but in rough terms I’d say you’re pretty close there in terms of the R9 billion mark.
“Obviously we’ve got a series of investors and shareholders, and that’s pretty much the gist of where the portfolio sits now.”
“Over the years we’ve worked with many partners. The one thing about property, especially at a significant level, the scale is immense and often it requires multiple investors to ensure we develop world-class, A-grade developments.
“So in the mix obviously we’ve dealt in the past with the likes of Growthpoint, we’ve dealt with Fortress in the past – and we still have investments and co-developments with them.”
“We’ve recently gone into a venture with, Intaprop [and] we are looking forward to building out with them. We see that being a really strong and like-minded alignment, which we are looking forward to venturing into.”
“Actis was really the catalyst for our sub-Saharan African expansion, and with their presence and having been established across sub-Saharan Africa, and specifically in the likes of Zambia and Nairobi, we’ve got offices in Nairobi, which is obviously an Actis-based initiative that allowed us to translate into those various jurisdictions; and it obviously provides us with the footing to be able to grow quite nicely there.”
“Coming back closer to home in the Rand Airport development, the Dakota Precinct, our partnership there with Nedbank Property Partners is also a new venture for us. Again, we like the fact that it’s a very like-minded team.
“We get on incredibly well with the guys … In the past we’ve done quite a bit of work with Nedbank Property Finance.”
“Having the ability to translate this into an equity partnership with a different division of Nedbank Property Partners, I think we see that venture being able to grow into something more significant over time.”
“We quite like the alignment there, especially the fact that, coming out of the bank specifically, they don’t necessarily compete with us and rather partner with us. It’s a very interesting alignment and something that we we’re looking forward to exploring and growing into the future.”
Give us a little more insight into the scale of the Dakota Precinct development and the roll-out plan?
“The full scale [of the precinct] is around R1.3 billion and we expect the build out to be over the next five to seven years, depending on market conditions.”
“So the first phase comprises the first little precinct of mid-units, only about 7 500 square [metres], but the full first phase is roughly 20 000 square metres in scale. We split the full development up into five different phases, so that it makes it more manageable from a servicing and planning perspective. Like that, we’ve got anticipated or intended-type developments for those various phases.
“But obviously, depending on demand and what we see coming through from the market, we’re flexible enough to change those various planned developments for the phases and execute what the market wants, and obviously try to get it to market as quickly as possible.”
Improvon is currently an unlisted company – any plans for a listing on the JSE or maybe in Mauritius in the future?
“Probably not in Mauritius. But obviously one doesn’t want to rule out any of the options that are available to us as an unlisted or as a private company.”
“Rather, we need to be conscious of how we raise funds and how we grow the business into the future – and obviously listing is a potential way in which we could do so and meet our future demands for growth. But, as things stand, we have no formal plans to list at the moment.”