Possible Broll & Gensec merger

Posted On Wednesday, 23 January 2002 02:00 Published by
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A tie-up would produce SA's largest property management company by far
A tie-up would produce SA's largest property management company by far 

IF BROLL acquires Gensec Property Services, it will be the largest property management company in the country by far.

Speculation is that Broll is a front runner in the bid to acquire Gensec Property Services. While Gensec Property Services MD Gerhard van Zyl says several companies have expressed interest in acquiring Gensec Property Services, and Broll MD Jonathan Broll says the group is in contact with Gensec, Broll says it is too early to draw conclusions. Van Zyl will not comment.

Broll manages a property portfolio of R8bn; Gensec's is worth R12bn. A merger would create a company with assets worth more than R20bn. The second-biggest property portfolio under one roof would be Old Mutual's, estimated to be worth just less than R12bn.

Gensec Property Services came into being at the beginning of this month following the split into two of Gensec Properties. The other formation is Gensec Property Asset Management. Gensec Property Services manages the property portfolio of insurance company Sanlam.

Gensec has said it will hold onto the asset management division and dispose of property management, in line with trends in the property industry. The creation of Gensec Property Asset Management should allow Gensec to concentrate on broader strategic issues such as portfolio composition, geographical spread and developing business plans for each building in the portfolio to capitalise on its life cycle.

Gensec Property Asset Management will also look at listing. Its triple A-grade portfolios are expected to boost the profile of the JSE Securities Exchange SA's listed property sector, which is haunted by subquality portfolios.

Broll has been out shopping for some time. The latest in its string of acquisitions is Domayne, which brought on board a huge property portfolio, including that of property loan stock company ApexHi.

ApexHi houses the assets of defunct Anglo American Properties (Amaprop) and Compass Holdings.

Broll brought under its management the portfolio of listed company Bonatla Properties. It also manages the portfolio of property loan stock company Shops for Africa.

At one point Broll stalked another major property services company, Colliers RMS, but did not clinch a deal. Predictions were that the property management business needed to and would consolidate, as property management was a lowmargin business requiring large volumes to make significant profit.

Further consolidation is expected, but could attract the attention of the competition commission.

The consolidation is expected to swallow and drive out the smaller players and create a few mega property managers.

Old Mutual Properties and Liberty Life Properties could feature on the list if they do not go Gensec's route. However, these companies are likely to follow in Gensec's footsteps, separating property from asset management, disposing of property management and taking their portfolios to the JSE.

Publisher: Business Day
Source: Property Editor

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