If the merger is successful it could create a listed property counter with a market capitalisation of between R24bn and R25bn, making it bigger than Growthpoint Properties, the JSE’s largest listed property company with a market capitalisation of R17,7bn.

The cautionary announcements, which were issued shortly before the close of trading, advised unitholders that the companies were considering a proposal that, if implemented, would result in the merger of ApexHi Properties, Hyprop Investments, Madison Property Fund Managers and Redefine Income Fund.

Madison is the asset manager of ApexHi, Redefine and Hyprop.

The companies advised unitholders to exercise caution when trading until a further announcement was made.

Wolf Cesman, executive director of Madison, said he could “not add to what is in the announcement”.

The announcement did not take listed property commentators by surprise. Len van Niekerk, head of quoted property at Old Mutual Investment Group SA, said it had been “saying for a while we expect consolidation in the listed property sector”.

“I wouldn’t be surprised to see the number of listed property companies halve from about 22 to about 10-12 over the next two years,” he said.

But he said that “size for size’s sake” did not mean “the merger of these companies is a good idea”.

“We will make a careful assessment of the offer once we see the proposed unit swap ratios,” said Van Niekerk.

Keillen Ndlovu, co-head of property funds at Stanlib, said the merger “would be positive in that it would create a megafund, which is relatively liquid and therefore attractive to international investors”.

But Ndlovu said the companies had diverse portfolios and a merger “could kill their specialised focuses”.

The Madison stable of companies is among the largest property counters on the JSE.