Marriot, the Durban-based group that manages SA Retail Properties and Martprop, says the unitholders of rival listed property fund Hyprop Investments stand to lose out if Hyprop proceeds with its takeover plans of SA Retail.
Mariott CEO Simon Pearse said yesterday that Hyprop unitholders could end up paying two levels of management fees if Hyprop were to obtain a large chunk of SA Retail’s units. Hyprop has modified its offer to SA Retail unitholders, and is offering a cash alternative as a sweetener. The company is now offering R8 cash for every SA Retail unit or one Hyprop unit for every 2,7 SA Retail units.
Pearse said although Hyprop intended to gain 100% of SA Retail’s units, the "practical reality" was that 15% of SA Retail unitholders had already told the Marriott group they would not accept Hyprop’s offer.
He said if Hyprop even succeeded partially with its bid and ended up owning a large block of SA Retail’s units, it would be unable to "delist and break up" SA Retail.
Pearse said SA Retail would continue as a listed entity on the JSE Securities Exchange SA with the Marriott group still contracted to manage the fund over the next two-and-a-half years at annual standard fees of 0,35% of the value of SA Retail’s portfolio.
However, Hyprop’s management company would also have to be paid fees of 0,5% a year as well as a R5m promoter’s fee.
Pearse said the Hyprop offer was also 20% more than the net asset value of SA Retail units.
But Hyprop MD Pieter Prinsloo said the company wanted to achieve 100% control of SA Retail and was "not contemplating" running a hybrid structure, where it owned only a chunk of units. He said there would be double fees only if SA Retail Properties and Hyprop stayed on the listed property sector.
