Tie-ups in store at listed property
Stronger firms eye takeover offers
The South African Real Estate Investment Trust (Reit) sector is poised to enter a period of sustained stress as SA’s economic woes continue to hit hard. This could spur consolidation, which has been largely absent for nearly two years. Investors have wanted to invest in larger and more liquid property companies with a market capitalisation of about R5bn, instead of many small R1bn and R2bn funds, which listed over the past four years. "Our view is that as certain companies come under duress, it is highly likely that stronger companies will engage in corporate action to take advantage of these opportunities," said Garreth Elston, fund manager at Golden Section Capital. He said this would include opportunistic moves, such as 2016’s unsuccessful offer by Arrowhead Properties to acquire Emira Property Fund, as well as more synergistic strategic corporate action that would improve companies’ scale, diversification and resilience. But acquiring companies would have to have the balance she...
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