Khumo Property compromises to replace Stuttafords

When the grand old Stuttafords finally tipped mid last year, leaving a hollow space that still lies vacant following its exist from Airport Junction Mall, Khumo Property Asset Management cautioned that a tenant had been found last year but would only take up occupancy of the prime space in July this year. When the new tenant finally occupies the space, the mall will have recorded almost 1 year of vacancy for the prime retail space, on a premises that squats on the bank of A1 freeway leading towards the eastern well-heeled suburb of Phakalane.
Khumo Property, the mall owners, declined to share the finer details of the agreement between the undisclosed incoming tenants. Property experts believe that the incoming tenant may have paid a holding fee to convince the asset manager to reserve the space until trading begins. If not, they believe it’s a crippling that would result in lower earnings at the height of retail saturation where tenants are spoilt for choice. “It would be interesting to be privy to the terms and conditions of the agreement,” Garry Juma, Research of Head at Motswedi Securities argues. “Remember property is a long term investment for increased yields,”
Without disclosing the name of the incoming tenant Nazly Wood, the Property Manager-Retail at Khumo Property told the Business Weekly & Review that “we secured a replacement tenant last year”. She would not be drawn further into discussing the matter with this publication.
Before its exit, the 159 year old Stuttafords was an anchor tenant occupying key space within Airport Junction. Anchor tenant is technical term that refers to a large store that rents space in a mall or other shopping center. Property pundits indicate that an anchor tenant carries with it the ability to attract more people to the mall than the other tenants. Depending on the size of the shopping center, there’s often more than one and at least two, with one at either end of the property. They often get key spaces and because it rents more space, it will generate more of the mall’s revenue, though others argue that anchor tenants generally foot rent rate lower than that paid by ancillary tenants.
Airport Junction boosts a seventy seven (77) tenant mix playing host to of anchor tenants like Spar, Edgars, Checkers and Builders Warehouse and then Stuttafords. Stuttafords ran two stores in Botswana, one at Airport Junction and another at the revamped Game City mall, the flagship of listed property outfit Turnstar Holdings. The retailer wound up after it struggled to service debts back home in South Africa. The closure of the local chapter of the retail giant left 58 local employees in the lurch.
The business rescue plan, focused on restoring the company to technical solvency failed. Soon after, a shutdown followed across all its stores in existing markets and South Africa, triggering an upset to mall owners who are still grappling saturation and divergent consumer patterns that are becoming the new force to reckon with for mall operators.
Property experts have raised concern that there is currently so much saturation that new tenants are spoilt for choice and will have an upper hand when it comes to negotiations, dictating rates.
Letlole La Rona found that the anticipated offloading of new retail space into the market, especially in Gaborone, with the completed expansion of Game City, the ongoing expansion of Airport Junction Mall and the planned development of the Smart Partnership retail centre may result in additional saturation of retail space.
Letlole La Rona is listed on the Botswana Stock Exchange and is a key player on the industrial market eying opportunities on the retail space. However, Letlole La Rona says, relaxation of licensing requirements for foreign retailers, following the granting of waivers for compliance with set procurement criteria considered pro-citizen empowerment, will result in increased demand for retail space, especially from South African retailers. “Prime yields for retail space, are around 8 percent.”
In the past, malls often targeted South African chains, who frequently obtained exemptions on local legislation that limits granting of certain trading licenses to local businesses.
While Khumo Property space is still vacant, Turnstar has found a replacement: Options, the high end fashion store which was founded in Mumbai, India. The retailer started trading last year and the mall is fully let. Last year, the Managing Director of Turnstar Gulaam Abdoola said they already had tenants waiting in line of the swanky mall, Game City. [S1]
While Wood said they also found a replacement last year, she said retailers have specific dates in the year when they can open new stores. “The new tenant will commence trade in June 2018.”
Khumo Property is a joint venture between Botswana Insurance Fund Management (Bifm) and Eris Property Group of South Africa, and was formed in November 2005. Bifm is the largest fund manager in Botswana. Property Group-formerly Rand Merchant Bank Properties (RMB) has more than R15 billion property assets under management in Southern Africa.