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Posted On Friday, 28 March 2003 02:00 Published by eProp Commercial Property News
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Property loan stock (PLS) company Pangbourne will soon move some prime properties into iFour, the PLS of which it bought 33% earlier this month. This could push iFour's holdings above R1bn.


Property-Housing-ResidentialPangbourne will build iFour into an A-grade portfolio, itself becoming a high-yielding option. "The market tends to rate a fund by its poorest properties, so moving our top properties makes sense," says Pangbourne CEO Atholl Campbell.

Both funds' linked units are trading above their NAV. This gives them the fire power to issue units rather than cash for properties they buy. iFour was up to 512c this week from 435c in December, and Panprop was 710c from 538c.

The iFour takeover is bad news for JH Isaacs (JHI), one of iFour's promoters for its listing last year, which now manages the properties. Campbell aims to develop his company as both investor and manager. So JHI will lose management to Pangbourne when its contract ends.

But Campbell does not want to increase his control over iFour. He believes it has more chance of a high rating if Pangbourne keeps its holding below 35% "and we have enough influence at that level to achieve all our objectives".

Most of Pangbourne's directly held portfolio is industrial, with nearly 1m m² of space, so it makes sense to shift prime offices to iFour. Campbell has also been steadily improving the remaining fund's quality and performance. He wants to make it a value fund as much as a property fund, with its objective to maximise total returns, including holding units in other listed property funds.

It grew substantially last year when it took over the listed CBD and Pioneer funds, but sold 18 CBD properties to ApexHi. It sold 32-million Grayprop and 22-million ApexHi units to buy iFour, supporting Campbell's claim that Panprop will not become a hybrid fund, like Redefine.

The industrial property holdings have growth potential if the global economy and exports pick up. And the fund is shifting its smaller commercial sector investment portfolio into newer properties, like a 40% share in the new Crescent retail centre in Umhlanga Rocks, Durban. Distribution to unit holders has been steady.

Some professional investors believe that the listed property sector has overshot its proper trend and prices could soon come back. But property is a long-term investment and both iFour and Pangbourne will reward patient investors.

Last modified on Wednesday, 07 May 2014 12:40

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