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Discovery founder and chief executive Adrian Gore has approved plans for the group to acquire its Sandton headquarters, 1 Discovery Place, in a transaction valued at 4.05 billion rand that is expected to deliver substantial cost savings and secure long term ownership of a landmark corporate asset.
Discovery said the acquisition would generate an initial annual cash flow saving of about 800 million rand over the remaining lease period. The group said the decision reflects changing market conditions that now favor ownership over leasing.
The medical aid and financial services group said lower interest rates and softer commercial property prices in Johannesburg created an opportunity to move from a long term lease structure to fully funded ownership at a lower overall cost. The group added that the transaction would allow it to optimize its use of office space.
In a statement, Discovery directors said the group began a detailed review of its long term property needs with seven years remaining on its existing lease. They said the economics that once favored leasing had shifted significantly in recent years.
The property is split into two phases involving Growthpoint Properties, a real estate investment trust listed on the Johannesburg Stock Exchange. Growthpoint currently owns 55 percent of Discovery Phase 1 and has agreed to sell that stake to Discovery for 2.32 billion rand in cash.
Growthpoint separately confirmed that its interest in Phase 1 had been identified for disposal as part of its capital allocation strategy. The stake was valued at 2.23 billion rand at the end of June 2023.
As part of the broader transaction, Growthpoint will acquire a 45 percent interest in Discovery Phase 2 for 323.1 million rand. Following implementation, Growthpoint will own the entire Phase 2 building, which is a multi tenanted office asset designed to provide diversified income.
Growthpoint said the disposal would reduce its office exposure in Gauteng and Sandton and lower its reliance on single tenant properties in the area. The group said the move supports a gradual rebalancing of its South African portfolio toward sectors expected to deliver more stable income, including retail logistics and increased exposure to the Western Cape.
The company acknowledged that the transaction would result in a higher reported office vacancy level but said the overall portfolio impact remained manageable.
Gore said the decision to purchase 1 Discovery Place reflects the group confidence in its long term outlook and its commitment to South Africa. He described the building as central to Discovery identity and growth.
He said the headquarters has served the group well and that acquiring it demonstrates balance sheet strength and pride in maintaining a strong local footprint.
Discovery shares fell 1.35 percent to 233.18 rand on Friday morning, though the price remains well above levels recorded a year earlier. Growthpoint shares rose 0.49 percent to 18.44 rand as investors digested the transaction details.
