By Sibonelo Radebe  

Rebserve is the dark horse as the first real opportunities for empowerment companies unfold     
 
Property companies are scrambling for black economic empowerment (BEE) credentials as the chance to profit from government's R120bn property portfolio draws close.  The consortium of private businesses appointed by the public works department to help develop a policy for the portfolio has completed its work. The department is now weighing its options, says spokesman Lucky Mochalibane. 

He says the department initially wanted to have an operating framework before the end of this financial year. But the scheduling of the elections in the same period has caused a delay. 

Will a lot of business be outsourced to the private sector?  "All I can say is that we are looking for innovative ways to best manage state property assets," he replies.  The process has been watched closely by players in the property services industry. It could translate into a boom for those who come across favourably to a government with new procurement policies.

This explains the scramble for empowerment credentials seen recently in property services.

More serious corporate action is still to come.  Companies that are equal to the department's challenge include well-established brands such as JHI Real Estate, Colliers International, Broll Property Group and the property services arms of financial institutions, among them Investec, Rand Merchant Bank, Sanlam and Old Mutual.  But some companies are more equal to the task than others . One is Broll, which has a 50% BEE partner, Mvelaphanda Holdings, headed by politician-turned-businessman Tokyo Sexwale. 

Small to medium-sized black-owned operations have emerged, including Johannesburg-based Dijalo Properties and Cape Town-based Hermans & Roman. 

Listed services group Rebserve is considered a dark horse. It has managed to walk off with lucrative public-sector business before, including a R15bn facilities management contract from Telkom in 2002.  More recently, the group won the 25-year facilities management contract for the new trade & industry department complex in Sunnyside, Pretoria. This was with the help of Cyril Ramaphosa, who served as Rebserve's chairman for three years until the end of 2002. The group enjoyed a period of strong BEE partnership with the Mineworkers Investment Co (MIC). 

But MIC's 13% stake in Rebserve had to be voluntarily liquidated because it stood on an unsustainable financial structure. Rebserve has since appointed some black executives and is looking for a new empowerment partner.  The group has also taken a keen interest in Broll, by far the largest property services company in SA, with assets under management of about R18bn.

Some say Broll could be the missing link needed to make Rebserve a well-rounded services company.  If Rebserve did acquire an interest in Broll, it could sweep up a huge chunk of the public works portfolio when it comes to the market. 

Besides, there's an opportunity for a reshuffling of ownership in Broll. Broll is held 50-50 by Catalyst Holdings and Mvelaphanda. Catalyst is a result of the 1998 merger between Broll - a property management operation founded by Jonathan Broll in 1974 - and a company called Property Asset Managers. Seventy percent of Catalyst is owned by management and staff and the rest is held by the Nedcor Group. Nedcor is disposing of its noncore assets. The stake in Catalyst fits this bill. 

It would come as no surprise if Jonathan Broll and some of his partners were willing to realise part of their investment, having been with the company for about 30 years. But Broll dismisses this suggestion.  He says last year's talks with Rebserve came to nothing.

Rebserve CE Will Paskins declines to comment.  If Broll and Rebserve did arrive at a deal, the united entity would have practically no competition in the local market for property services.

And it might trigger a wave of consolidation in this sector as other firms try to catch up.