Pretoria - Setting a target for black economic empowerment (BEE) equity ownership in the listed property sector did not make sense and was inappropriate, Len van Niekerk, a property analyst at Andisa Securities, said yesterday.
Van Niekerk stressed that property unit trusts and property loan stock companies were investment trusts and not operating businesses like Edgars Consolidated or Anglo American.
"It's like saying unit trusts need to be empowered. There is no such thing in the Collective Investment Schemes Act. Listed property is effectively a unit trust. They are not like a normal company "It's like saying unit trusts need empowerment. They are not like a company"
. If people want to get in, they can buy the units," he said.
Van Niekerk questioned how many unit trusts were empowered, adding that this was an issue the property sector would have to ask itself when it put together a charter for the sector.
However, Van Niekerk said some of the listed property companies were becoming more creative in bringing in black equity ownership without dilution, although the funding of deals at fair value was problematic.
He said possible solutions to the funding of these deals were to gear them, to include an equity component or to structure deals, but emphasised there were "a few more hurdles to overcome".
Van Niekerk said BEE in the sector would be an issue over the next three to five years and referred to a recent survey, which revealed that, in terms of board representation, the sector did not have any black female directors and only a handful of black directors.
"Clearly, this is not a sustainable situation and it's something that will have to improve. But it's not easy to fix," he said.
Van Niekerk said the role of non-executive directors was important because the sector was small, but it was difficult to find and attract quality non-executive directors.
"The ego factor and bragging rights attached to being invited to be on the board of other large companies isn't there," he said.
The "the small pool" of people available as directors "shrinks to a puddle"
when the list was restricted to available black people.
Companies did not develop a director to be "up to speed" and directors needed to be competent to do the job.
"Development needs to be done at employment level. All listed property companies are pulling their hair out in this regard.
"There's not an easy solution. It's easy for the government to point fingers but companies say 'find me someone and I'll put them in'. It's a short-term problem. It takes time to bring people through to board representation," he said.
There was a need for the sector to focus on asset and property management, where people could be brought through and their skills developed.
