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Sanlam's strategy sheds property worth R1.5bn

Posted On Thursday, 03 June 2004 02:00 Published by
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Sanlam Properties will have taken R1.5 billion worth of property off its books this year when the Vukile Property Fund is listed this month.

Property-Housing-ResidentialCape Town - Sanlam Properties will have taken R1.5 billion worth of property off its books this year when the Vukile Property Fund is listed this month.

Vukile will be worth about R2 billion and will be made up of properties worth R1.1 billion from Sanlam, the R500 million property portfolio of the Kuper Legh Property Group, and third party vendor properties worth about R350 million.

Bonnie Olivier, Sanlam Properties' national sales manager, said the firm was downscaling its exposure to property, either through listing or market sales.

The strategy was to bring Sanlam's property holdings more in line with international norms "Insurers will only look at selling or listing properties if there is relative uncertainty about income streams" . It had sold about R400 million of property this year, excluding that of the soon-to-be-listed Vukile.

In October last year, Sanlam Properties listed the MICC Property Income Fund with a portfolio of R900 million.

Angelique de Rauville, the managing director of property asset manager Provest, said that although Old Mutual and Liberty had been in no hurry to list their directly held property holdings, she expected it would eventually happen.

 

She predicted that, in time, about 80 percent of the R30 billion worth of property held by institutions could be listed. But she said it was highly unlikely that the institutions would sell their crown jewels, such as Old Mutual's Gateway and Cavendish centres and Liberty's stake in Sandton City.

Leon Allison, an analyst from First South Securities, said the chances of the institutions listing or selling their core properties were very slim.

"Many of these prime properties, especially the shopping centres, are trading at income yields well below that of the average listed fund. Listing these properties would in effect mean that the institutions would have to write off part of the property values, something that would never happen," Allison said.

An analyst, who asked not to be named, said the properties held by institutions were a relatively secure source of cash flow needed to offset liabilities.

"Insurers take a long-term view. They will only look at selling or listing properties if there is relative uncertainty about future income streams of the individual properties," the analyst said.

Rowland Chute, a director at Old Mutual Properties, said he could not comment on the listing or selling of Old Mutual property, as it only managed the properties on behalf of the Old Mutual Life Assurance Company.

Last modified on Tuesday, 13 May 2014 11:51
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