Calulo looks at state properties

Posted On Monday, 09 May 2005 02:00 Published by Commercial Property News
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New listed property company says it is currently talking to government with a view to acquiring one or two of its properties on the market

Richard HarmanNew listed property company Calulo Property Fund, which has a substantial black economic empowerment component, says it is currently talking to government with a view to acquiring one or two of its properties on the market.

Calulo is in a strong negotiating position as one of the most empowered listed property companies in a sector dominated by whites.

In September last year it was announced that Calulo Properties, a company controlled by empowerment group Calulo Investments, had agreed to buy 95,5% of the issued linked units in Annuity Property Fund, which was effectively a shell company with one property in its portfolio.

In November, it was announced that Annuity?s name would be changed to Calulo Property Fund.

Calulo Properties holds a 22,8% interest in the listed fund, 50,1% stake in the fund?s asset managers, and 60% in its property managers.

There are no other property funds on the JSE Securities Exchange SA with all three empowerment credentials.

Calulo Property Fund CEO Richard Harman says Calulo is also "talking" to government and parastatals at the moment with a "view to trying to understand which properties they have identified for disposal".

"We are also trying to assist and advise them (government and parastatals) on how to make the disposal transparent yet ensure that those properties end up in black economic empowerment ownership structures," says Harman.

He says Calulo has an advantage over other listed funds in that it has black ownership in its operating division as well as a black interest in the actual listed fund.

"Most people accept a 25% benchmark as empowerment and the fund intends to achieve this shortly and sustain it going forward," he says.

At a recent conference in Sandton the national public works department said it spent more than a R1bn a year leasing accommodation from the predominantly white private sector on behalf of government departments.

The department said it was in the process of reviewing its leasing policy to ensure that transformation objectives were supported. As leases come up for renewal it plans to give preference to black empowered property companies.

Harman says that rather than using its existing portfolio and negotiating to get government tenants, Calulo would rather acquire properties with existing government tenants.

"We are talking to a number of listed property funds which own properties with government tenants with a view to acquiring these properties. We are in a better position to negotiate leases than many of the funds given our empowerment credentials," he says.

"We are also talking to government specifically about one or two of their properties that are on the market."

Harman says they are also negotiating to buy from private property owners who are struggling to renegotiate their leases with government because they lack empowerment credentials.

Calulo Property Fund has acquired a R380m property portfolio.

"Most of the properties have been transferred to the fund and the balance will be transferred shortly," says Harman.

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