Listed property firms may join in ’megafund’
Nick Wilson
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Property Correspondent
LISTED property loan stock company SA Retail Properties and property unit trust Marriott Property Fund (Martprop), both managed by Marriott, yesterday released cautionary announcements that fuelled market speculation the two may be planning a merger.
A merger would create a “megafund” and act as a counter to possible hostile takeovers by another listed property fund with no links to Marriott.
The announcements, released separately, said that Martprop and SA Retail Properties had entered negotiations, which if successful, could have an effect on the price of their securities and units.
The listed property funds urged unitholders to exercise caution when dealing in their stocks until a further announcement was made.
Last week speculation that SA Retail Properties could be the target of a hostile takeover by another listed property fund set the market abuzz. Analysts did not say who was likely to be the main contender for a takeover, but listed property loan stock firm Redefine Income Fund, which owns about 27% of SA Retail Properties, was seen as either a possible bidder or seller.
Although Redefine said it had no intention of making an offer for SA Retail Properties, it confirmed it had been approached by a number of parties wanting to buy out its interest in the firm.
Redefine also said it would sell its interest at the right price.
Angelique de Rauville, MD of listed property portfolio management company Provest, part of Investec Property Group, said that given speculation about a possible takeover by key industry players, including Provest, a defensive strategy from Marriott would be to merge Martprop and SA Retail Properties.
De Rauville said Provest was in favour of a merger because there were advantages to a consolidation of the two property stocks, including reduced operational costs, increased liquidity and greater diversification.
She said Provest had also previously questioned the “strategic intention” of sister companies like Martprop and SA Retail Properties jointly investing in property instead of each fund buying its own.
She said the announcements were likely to “culminate in a commercial arrangement regarding the merger of these two stocks”.
Martprop, which is a predominantly industrial property fund, has a market capitalisation of R1,7bn, while retail-property focused SA Retail Properties has a market capitalisation of R1,3bn.
A merger of the two could create a single fund with a market capitalisation of more than R3bn, making it the third biggest property stock after Growthpoint and Grayprop.
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