Property has always been part of Natie Kirsh’s empire, from his first shopping centre in Swaziland in 1966 to his 1970s Nedbank Mall and the centres he built when he controlled Checkers.

But it was never a big part of his life.

Now it is where he wants to invest most of his free capital. Why? “There are many deals floating around,” says Kirsh. “The big guys have got indigestion and the little guys can’t raise funding.” Over the next two years as much as £160bn of property finance matures and must be renegotiated with UK banks that are not eager to lend on property.

“There are also large corporations that have decided to reduce their property exposure,” he adds. “It’s logistically impossible for them to sell their properties one at a time, so they look for investors with deep pockets to buy in bulk.” Kirsh points to a document on his desk. “This is a large US commercial property portfolio that would have a market value of US600m if the properties were valued and sold individually.”

He says there is the income stream that would value the property at a forward yield of say 8% and the price would be the value less the borrowings. “But if we buy the lot, we could pick them up for $350m or $400m, giving us a 14% yield. I then put in say $150m in cash, borrow the rest and I would have an excellent investment with positive cash flow.”

Kirsh has been buying into listed property funds. He snapped up 30% of London listed Minerva at 25p and then made a bid for a controlling stake at 50p but, with the price rising to 80p, it was unsuccessful. It hasn’t been an easy ride. Minerva has two iconic properties in the city of London, St Botolphs and The Walbrook that are near completion and it has other development sites around the city. He hopes to provide some strategic input into the company’s direction.

Kirsh opposed the executives who managed to get enough votes at an extraordinary general meeting to reinstate the chairman, who Kirsh had removed at a previous meeting. “We lost that battle,” he says. “But we’ll win the war.”

More friendly is his 30% acquisition of Australian listed property trust Abacus. Kirsh’s timing was good. He paid A25c for a 15% share last year and underwrote a rights issue at the same price. The price has since almost doubled. Abacus needed to raise funds to bring its loan to value ratio down to meet its covenants with its lenders. Kirsh showed how to do this and now everybody is doing it the same way.

SA listed fund Redefine, which has its own international property objectives, was beaten to Abacus by Kirsh. “He’s learning that taking over a listed property fund isn’t as easy as he thought it would be,” says Redefine CEO Marc Wainer. “But his timing is so good he must have made something like £100m and A100m out of his two deals.”

That is small compared with the deal he has been negotiating in Europe — a huge financial services-owned portfolio of commercial and residential properties with a good cash flow but with a large debt that he will have to refinance. All other bidders have been eliminated, and it’s down to government giving the nod. As the interviews with Kirsh progressed last week, he became more hesitant about going into it. “It’s very complicated,” he says. “I’ve already got deal fatigue.”

Yet it gives him the opportunity to do what he loves most — transform things.

So he was torn until early this week, when he decided not to go ahead. “It was really a one-year call,” says Kirsh. “And there are too many other clean opportunities that would not be available as we concentrate on the one big one.”

In 1980, he met the mayor of Herzlia in Israel who excited him about the idea of a marina that would transform the city. So with an Israeli partner, Moti Zisser, they built a massive development, that included Israel’s first Marina.

Most of his other property coups, however, have been with SA partners.

He has other investments in Perth. With his partners, they have a joint venture with the Western Australian Cricket Association to develop the land around the WACA stadium. He recently paid A80m (R550m) for a prestige office building, Westfarmers House, in the Perth CBD.

Kirsh has set the ball rolling to expand his property interests, but he now needs someone to run it. He recently appointed heavyweight chartered surveyor Philip Lewis (56), deputy chairman of Lambert Smith Hampton, the property consultant that has 700 people in 28 offices, to take over his property reins. Lewis was a director of Heron International, the private property company led by UK tycoon Gerald Ronson and executive chairman of Hines UK, one of the world’s largest property development and investment firms, with assets of about $10bn.

This will free up Kirsh to think big. “Property needs less management. But it is also a real asset,” says Kirsh.

Source: Financial Mail