Heriot REIT to acquire 75% stake in Katleho Property Investments in $7.84 million deal

Heriot REIT, a Gauteng-based property holding and investment giant led by South African real estate tycoon Steven Herring, has agreed to acquire a 75% stake in Katleho Property Investments Proprietary Limited (KPI) in a transaction valued at approximately R128.9 million ($7.84 million). The deal is part of the company’s strategy to expand its portfolio of income-generating commercial assets.

The acquisition will be executed through share exchanges with Heriot Investments Proprietary Limited and Gabenjosh Investments Proprietary Limited. In return, Heriot will issue 5.6 million new shares at R23 per share to the vendors, increasing its exposure to high-yielding office properties in South Africa.

Heriot REIT’s expanding property footprint
KPI is a South African property investment company with a portfolio of income-producing commercial assets, primarily office parks in Gauteng. Its holdings include Infinity Office Park, Meyersdal Office Park, and 238 Roan Crescent, collectively valued at more than R300 million ($18.25 million).

The assets generate rental income from a diversified tenant base, aligning with Heriot’s strategy of strengthening stable, cash-generating real estate holdings.

Strategic rationale behind Heriot REIT’s investment
The Johannesburg-listed real estate investment trust said the transaction was concluded at a 20% discount to KPI’s agreed net asset value, making it immediately accretive to shareholders. The move reflects the REIT’s broader strategy of scaling its asset base through disciplined acquisitions of undervalued properties.

The company has increasingly focused on streamlining its portfolio while targeting assets that offer strong income visibility and long-term growth potential.

Financial performance of KPI
According to KPI’s unaudited management accounts, its net asset value stood at approximately R209.5 million as of May 31, 2026, while profit before tax for the preceding 12 months reached about R42.8 million.

Heriot noted that it is satisfied with the quality of the financial information, although investors may want to verify these figures once audited statements become available.

Related-party structure
The transaction involves related parties. Heriot Investments, which is set to receive the majority of the new shares, is a significant shareholder in Heriot, holding roughly 89% of the company before the deal. It is owned by the Gusi Trust, linked to director Steven Herring and his family.

Gabenjosh Investments, which will receive a smaller portion of the shares, is controlled by the Herring Family Trust, associated with director Richard Herring.

Despite the related-party nature of the transaction, its size falls below the threshold requiring approval under JSE Listings Requirements.

The acquisition is expected to become effective on June 30, 2026, subject to regulatory and shareholder approvals. Voting on the resolution is scheduled to close on July 24, 2026, although approval may be finalized earlier once sufficient votes are received.

Heriot REIT’s expanding influence

Under the leadership of Steven Herring, who owns 89.07% of Heriot REIT, valued at R6.56 billion ($398.92 million), the company has grown from a small 50-square-meter office in 1998 to a significant player in South Africa’s property investment sector. His Son, Richard Herring, who serves as the CEO, holds a 4.61% stake, which is currently worth R339.23 million ($20.63 million).

With a market capitalization of R7.36 billion ($447.65 million), Heriot’s strategic acquisitions since 2003 have allowed it to expand its portfolio to include over 19 industrial properties. Today, the company’s total assets are valued at R13.82 billion ($844.12 million), further solidifying its position as a key player in the industry.

The deal underscores Heriot’s continued push to deepen its presence in South Africa’s commercial property sector. By acquiring a controlling stake in KPI at a discount, the REIT is positioning itself to enhance earnings while expanding its portfolio of office assets.

As competition intensifies in the real estate investment space, Heriot’s ability to source discounted, income-generating properties could play a key role in sustaining long-term returns for shareholders.