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Wooing the only woman in town.

Posted On Friday, 07 March 2003 10:01 Published by
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Bonatla, the plain Jane property company with a market cap of R100m, has become a mistress with many suitors.
By Ian Fife

Bonatla, the plain Jane property company with a market cap of R100m, has become a mistress with many suitors. The latest is RMB Properties, which wants her - and is likely to win her - as the vehicle for a planned listed loan stock company (PLS).

Market talk is that RMB Properties is making a cash offer that should knock rivals Redefine and Fairvest out. RMBprop CEO Bryan Jackson would neither confirm nor deny this.

If it's true, RMB will be the first of a wave of institutions looking for vehicles to convert directly held properties into more liquid listed holdings. There is pressure for big property owners to do this before interest rates fall and while yields on directly held properties are much lower than those of listed funds, and therefore relatively worth more.

This gap could disappear as rates drop and the sector is rerated. They could arrange to place their portfolios with existing specialised funds, as Sanlam has been doing, or create their own by takeovers or new listings.

Three weeks ago Redefine bid 54c cash a share after Niki Vontas's Fairvest proposed a merger with Bonatla at an effective 48c/share the previous week. Bonatla's attraction is its sound R630m portfolio put together by Vontas three years ago and the large discount to its NAV of 97c. The share price earlier this week was 54c, up from 40c last month.

If RMB offers 60c/share, will Redefine, which bought 25m Bonatla at 40c, up its offer, sell for a 50% turn or stay in for the ride with RMB? "At more than 60c we'll be first in line to sell," says Corpcapital deal maker Marc Wainer. "Though if RMB puts good properties into Bonatla we may stay in."

Fairvest, which is cash poor, could not compete at 60c. If RMBprop wins Bonatla, Fairvest (market cap R74m) faces an uncertain future. ApexHi, a sister company of Redefine's in the Corpcapital stable, offered 65c/share for Fairvest (now trading at 55c). But Vontas would want to combine Fairvest with his new project, PLS Gold Edge.

RMB could bid for Fairvest as well, as a vehicle for a higher risk fund. The ambitious property arm of the banking giant is well placed to become a major player in listed property. Besides the vast FirstRand portfolio, it manages an array of inner-city and suburban commercial and retail buildings.

Financial Mail

Publisher: Financial Mail
Source: Ian Fife
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