Liberty Two Degrees (L2D), which offers investors exposure to iconic assets such as Sandton City and Melrose Arch, is considering four large property deals, worth billions of rand, as it tries to bolster its retail portfolio and boost its share price.
The group has been a major underperformer in terms of share price growth since it listed in December 2016.
"We’ve been looking at four deals over the past few months. We have a strong portfolio of assets which we consider to make up the best retail portfolio in the country and now following our restructure we are in a position where we can enhance our portfolio and attract more institutional investors," said financial director José Snyders.
The company’s share price is down 2.4% year to date with it struggling to attract investor interest from large institutions.
L2D listed at R10.50 but its price has been weak since. It closed flat at R8 on Monday.
L2D, which has exposure to the larger Liberty group’s R30bn property portfolio, including Eastgate and Liberty Midlands Mall, is undergoing a restructure. L2D’s market capitalisation is about R7.27bn.
The restructure will see it absorb its external management company and also do away with a controversial put option that it had with the Liberty group. The put option allowed Liberty to sell assets to L2D at net asset value regardless of L2D’s share price.
The put option had created a situation where L2D could be a buyer of assets and it did not matter if these assets would actually improve the fund, said Anas Madhi, a director at Meago Asset Management.
One property company L2D may make a play for is Accelerate Property Fund, which has a market capitalisation of R5.3bn and is nearly finished expanding Fourways Mall into a 200,000m² shopping centre, which will be the largest in Africa.
L2D CEO Amelia Beattie said she wanted to invest in retail assets that were supported by strong precincts.
"Fourways Mall is a strong asset. If we were to acquire Accelerate, we would have to sell the offshore component as we intend to have a purely South African focus," she said.