Fortress Retains Full Ownership of Pick n Pay's Impressive Distribution Centre at Eastport Logistics
Category Property Fund News
Fortress Real Estate Investments Limited has announced that it will maintain 100% ownership of the newly constructed Pick n Pay super distribution centre at Eastport Logistics Park in Gauteng. This state-of-the-art facility, strategically located along the Albertina Sisulu Freeway, represents a significant investment in the region's logistics infrastructure. Let's delve into the details of this development, highlighting its features and the revised agreement between Fortress and Pick n Pay.
The impressive Pick n Pay super distribution centre spans an area of 164,000 square meters, situated in the northeastern part of Eastport Logistics Park. With direct access from the R21 Expressway, the centre is strategically positioned to streamline operations and enhance accessibility. It comprises approximately 95,000 square meters of ambient storage for groceries, 48,000 square meters of cold storage, and additional space for returns, offices, gatehouses, and aerosol storage.
Initially, a separate special purpose company was to be formed, with Pick n Pay acquiring a 60% undivided share in the distribution centre, while Fortress retained a 40% undivided share. However, the agreement has been amended, resulting in Fortress retaining full ownership of the asset. Under the revised terms, Pick n Pay will pay rental based on an initial yield of 8.5% on the total development cost, effective from June 1, 2023. The estimated total cost of the development, including capitalized interest, is approximately R2.13 billion, in line with initial projections.
The Pick n Pay distribution centre at Eastport Logistics Park incorporates cutting-edge technologies and sustainable features. It boasts a 3 MWp solar photovoltaic (PV) system, a 1-million-litre rainwater storage tank, and advanced automation throughout the facility. These measures align with Pick n Pay's commitment to reducing its environmental impact and ensuring efficient operations.
The distribution centre's location offers excellent vehicle accessibility and visibility, with its proximity to the R25 off-ramp of the R21 Albertina Sisulu Freeway. This prime positioning enhances logistics operations and facilitates streamlined distribution to Gauteng's diverse markets. The new facility will enable Pick n Pay to centralize its supply chain, optimize efficiencies, and expand its market share. Furthermore, it will support the retailer's customer value project, aimed at entering the premium retail space and broadening its customer base.
Pick n Pay's decision to amend the financing agreement with Fortress reflects a more prudent approach to capital investment, considering factors such as load shedding costs. By securing this revised agreement, Pick n Pay can fully leverage the operational benefits of the Eastport facility while directing its capital investment towards new store openings and store refurbishments.
This monumental distribution centre stands as South Africa's largest single-phase warehousing development. Fortress Real Estate Investments Limited expresses its pride in owning this asset, which enriches its logistics portfolio. The strategic partnership between Pick n Pay and Fortress is set to drive innovation, efficiency, and market growth, reinforcing the retailer's commitment to providing affordable prices and reliable service to its customers.
The completion of Pick n Pay's new distribution centre at Eastport Logistics Park marks a significant milestone in Gauteng's logistics landscape. With Fortress retaining full ownership of the facility, Pick n Pay is poised to benefit from streamlined operations, enhanced efficiencies, and sustainable features. This state-of-the-art development positions Pick n Pay for growth, while its revised financing approach reflects prudent decision-making in a dynamic business environment. As the largest warehousing project in the country, this distribution centre is set to make a substantial impact on the region's retail and logistics sectors.
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Author: Warehouse Finder
