Dairy group Clover has sold its Johannesburg’s City Deep cold storage and distribution centre for R52.5 million as part of its strategy to centralise operations to main plants having faced service delivery issues in many of its outlying assets.
The sale of the warehouse, reportedly to a private Durban investor, who will lease the premises out to a cold storage operator, follows the sale in 2021 of Clover’s R50m Bellville, Western Cape facility, also concluded by private treaty by Cushman & Wakefield/Broll to a private buyer.
Steven Velthuysen, Clover's group manager: Legal & Secretarial, confirmed that the sale was part of centralising operations.
“It is well documented that we are consolidating our operations to bigger plants like Queensburgh. We have had some struggles with municipalities in terms of poor service delivery and although we have had engagements, nothing has come of it,” he said.
Velthuysen added that it in was mostly small towns that Clover faced service delivery issues.
This as Clover last year closed down its cheese factory in Lichtenburg, North West, blaming the move on “ongoing poor service delivery” by the local municipality after large losses due to long-standing water and electricity disruptions.
It subsequently moved its production activities to Queensburgh in Durban, where the company already has a plant.
Clover developed a stratergy in 2014 called project Sencillo aimed at simplifying its processes, and addressing service delivery issues in various municipalities by semi-centralising operations to areas where the company could be most effective and profitable.
The company said in March that there had been massive declines in volumes in its various operations including Danone, Eskort and Enterprise brands.
Sean Berowsky, a director of Capital Markets, Cape Town at Cushman & Wakefield/Broll, said on the City Deep sale that it was a very good price.
“The huge amount of land which forms part of the site is attractive in terms of a potential future redevelopment, and could see the entire site getting a new lease on life as this facility is in a prime logistics node, close to main arterials,” Berowsky said.
Berowsky said the industrial property market was seeing a resurgence of strengths it was building up to before Covid-19 and that there was a potential for robust activity is sales and rentals.
“It is well documented that the commercial office market has been affected by Covid with people now able to work from home, but the industrial sector has done well in this climate. It has taken the direction it had been on pre-Covid,” Berowsky said.
City Deep is an industrial suburb of Johannesburg and is Africa’s largest dry port. The container terminal is connected to the Port Durban, Port of Ngqura, Port of Cape Town, as well as Southern Africa by road and rail.
The sale comes as Clover weathered a prolonged strike by its workers in November. The strike petered to a halt without resolution after the company fired the striking workers and rehired some willing to accept the pre-strike packages.
Mediation by bodies including the CCMA, the Industrial Development Corporation and Department of Labour and the Department of Trade Industry and Competition could not bridge the gap between the parties.
BUSINESS REPORT