By Nick Wilson

Property pundits are expecting a significant number of the 30 JSE-listed property funds and companies to conclude empowerment deals this year.

With the property sector empowerment charter expected to be finalised this year, some companies are already negotiating deals, while others are waiting to see what the final charter holds so their deals will conform with its requirements.

The listed property sector has a total market capitalisation of more than R50 billion and empowerment groups will be looking for footholds in it.

In the past 18 months or so, four listed property companies and funds have concluded empowerment deals.

In July 2004, Cyril Ramaphosa's Shanduka Properties acquired a 50,4% stake in Property Fund Managers, the asset management company of Capital, in a black economic empowerment deal facilitated by Old Mutual.

In February last year, Spearhead said it had negotiated deals that would result in about 25% of its shareholding going to black empowerment partners.

In August last year, Growthpoint, the largest property company on the JSE, concluded the largest empowerment deal to date when a consortium including former justice minister Penuell Maduna and former director of public prosecutions Bulelani Ngcuka bought a 14,2% stake in Growthpoint in a deal worth R1bn.

Pangbourne said in October that it had concluded a R125 million black economic empowerment deal.

Mariette Warner, head of property funds at Stanlib Asset Management, says there will be a lot more empowerment deals this year.

But she says that some of the property companies are waiting for the property charter to be finalised before they implement their empowerment strategies.

Catalyst Fund Managers says that with "just about every" company presentation or results presentation, companies say they are investigating empowerment transactions.

One likely candidate for an empowerment deal is Vukile Property Fund.

Sanlam owns about 58% of Vukile and if it decided to sell a percentage of its interest to an empowerment group, Vukile would not have to issue any new linked units.

There is now speculation that Sanlam may have already sold a portion of its interest to an empowerment grouping.

Vukile said last week that a "transaction has been concluded between an existing unitholder and a third party".

The company said this had resulted in the "introduction of a significant new unitholder into Vukile".

But Vukile would not elaborate, saying details of the transaction would be announced later.

Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge