Cabinet has endorsed the consolidation of the property portfolios in principle, pending the outcome of a study into restructuring options that is currently under way.

The proposed property management company would exclude ownership of the department of public works' R120bn portfolio, but could include its management.

Telkom's property portfolio was valued at about R4bn, Eskom's at R1bn, Denel's commercial properties at R750m, the Post Office's at about R750m and Transnet's non-specialised-commercial portfolio at R2bn and Propnet's at R600m.

Propnet's CEO Sipho Mashinini said restructuring the property portfolio would realise value, optimise returns and achieve business efficiency by eliminating duplication.

It would also achieve economies of scale, eliminate undesirable subsidies and create a property-focused entity.

The restructuring would provide scope for broadening black participation in both commercial property ownership and skills development.

The option also existed for the entity to be listed on the JSE Securities Exchange SA.

Mashinini said care would have to be taken not to saddle the new entity with non-performing assets.

All properties should be included, except specialised ones required, for example, for electricity generation.

Business Day