Nick Wilson

Property Correspondent

A NEW property company, Old Mutual Property Group, to be formed by a merger between Old Mutual Properties and Marriott’s property business, will be the biggest fund manager in the listed property sector of the JSE.

The new group will have a 19% share of the listed property sector under its management.

The market capitalisation of the JSE’s real estate index is more than R50bn, and the Old Mutual Group will manage about R10bn worth of listed property.

Old Mutual Properties said last week that it had acquired the property business of Durban-based Marriott for an undisclosed sum.

Colin Young, property executive at Old Mutual Properties, said Old Mutual had never been involved in managing a listed property company and that the merger provided access to South African-listed property funds Martprop, SA Retail, Ambit and Namibian-listed Oryx. All these property funds fall under the Marriott stable.

"This should benefit particularly SA Retail and Martprop shareholders ... They have access to our debt, retail skills, as well as our development pipeline," Young said.

SA Retail is a retail property fund, while Martprop is a predominantly industrial property fund.

Old Mutual SA MD Roddy Sparks said Oryx gave Old Mutual a "nice footprint in Namibia".

Andisa Securities property analyst Len van Nierkerk said Martprop, SA Retail and Ambit could be a conduit through which Old Mutual could list some of its properties.

"I wouldn’t be surprised to see Old Mutual exercising more influence over the asset and property management of those listed property funds," he said.

Angelique de Rauville, MD of listed property portfolio management company Provest, which was part of the Investec Property Group, welcomed the deal and said it was "very good" for the listed property sector to have Old Mutual enter the fund management market.

"We would hope that phase two of their (Old Mutual) entry into this market would result in some of Old Mutual’s properties being sold into listed property stocks," De Rauville said.

"The listed property sector is too small and this transaction could result in new properties in the form of Old Mutual properties coming to the market."

Meanwhile, Motseng Property Group and Marriott Corporate Property Services have ended their joint venture property company with Marriott, the groups said on Friday.

Motseng Marriott was launched in August 2002 as SA’s largest empowered property group, with R2bn in assets under administration in its portfolio.

Motseng Property Group, the property management arm of Motseng Investment Holdings (MIH), said it had bought the remaining 50% in Motseng Marriott from Marriott, giving it full control of the group.

"Our new position will present key opportunities that will assist in reaffirming our status as the (SA’s) biggest 100% black-owned economic empowerment property management company," MIH CEO Sandile Nomvete said.