The strategy would be pursued by new management following the surprise resignation of CEO Selwyn Smith and director Colin Blacher last week.

Shareholders had been expecting a deal that would see Gold Edge acquiring the Daisy Street portfolio, represented by Vontas, in a R400m deal.

However, the company announced yesterday that it had acquired the IXIA portfolio, also represented by Vontas, for R176m. IXIA represents the first tranche of a group of properties Gold Edge would have obtained through the Daisy transaction.

The deal had been restructured because some of the agreements in the original Daisy deal had already lapsed during the lengthy period of negotiations, said Vontas yesterday.

The second tranche of properties originally contained in the Daisy portfolio would be transferred to Gold Edge in a R300m deal in about August.

The properties in both deals were sourced from Bonatla and Fairvest, among other companies. "By year-end, Gold Edge could have R800m worth of properties," said Vontas. The company would also be repositioned to offer higher returns.

"We are creating a new company, which will generate higher returns than traditional property companies," said Vontas.

The low returns of 13% to 17% generated by traditional property companies rendered them uncompetitive compared with other sectors on the JSE Securities Exchange SA, Vontas said.

The new Gold Edge would have three components: a traditional investment portfolio, a property development and trading component, as well as an asset management arm. This would enable Gold Edge to generate returns in the order of 20% to 25%, said Vontas.

With its asset management function in-house, Gold Edge would retain substantial fees previously paid to external asset fund managers.

Vontas suggested this would be the way forward for property companies in the country.

He said the sector had grown from R4bn to R17bn in the past 11 years, but was underanalysed and misunderstood by analysts who assessed listed property companies on their ability to generate cash.

Vontas, a well-known personality in the sector, had plans to launch an independent property research venture, as well as a global property fund.

Vontas, who did not have an interest in Gold Edge, planned to centralise his trading activities through Gold Edge.

Gold Edge also said yesterday it would restructure its share capital into linked units.

The IXIA deal and capital restructuring was subject to shareholder approval and to the JSE granting approval for the listing of the new units linked to Gold Edge.

Earlier this month, Gold Edge reported poor results for the six months to December, including an expansion in headline losses a share to 8,10c compared with 0,74c in the full year to June.

Business Day