On 24 October 2012 the Competition Tribunal conditionally
approved the acquisition of a portfolio of eleven commercial
properties of SA Corporate Real Estate Fund by Fairvest Property
Holdings Limited. The reasons for the approval were subsequently
issued on 7 November 2012.
Fairvest currently owns a number of commercial properties in the Eastern Cape, Free State, Gauteng and KwaZulu-Natal provinces. SA Corporate Real Estate Fund, in turn, is a diversified real estate investment fund with assets in retail, office and industrial properties situated in the major metropolitan areas of South Africa.
The Tribunal found no geographical overlap between the parties' activities as their properties are located in different geographic nodes and therefore do not compete in the same market. Three of the shopping centres that form part of the acquired portfolio have, however, entered into lease agreements with existing anchor tenants that contain certain exclusivity clauses. The Competition Commission raised the concern that these agreements, due to expire in 2013 and 2014, may prevent small businesses from gaining access to rentable retail space in the respective shopping centers.
The Tribunal took these concerns into consideration, as well as certain undertakings given by the parties to the merger, and approved the transaction subject to the condition that Fairvest will negotiate with the anchor tenants in the relevant shopping centres with the aim of removing the exclusivity clauses in their lease agreements.
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