Listed property BEE on track

Posted On Wednesday, 21 February 2007 02:00 Published by
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The listed property sector appears to be on track to meet the targets of its empowerment charter, which is aimed at placing 25% of the property sector in black hands in five years.

Mariette WarnerBut expensive listed property prices and higher interest rates may make it increasingly difficult to facilitate empowerment deals. Fortunately, a significant number of listed property companies have concluded empowerment initiatives in the past two years. The property charter, which has five-year targets for empowerment, was signed in March last year.

Andy Tondi, chairman of the steering committee charged with drawing up the charter, says listed and unlisted companies have concluded initiatives.

“We’re excited. We’re seeing a lot of movement in the listed and unlisted property sector in terms of empowerment deals.”

But he says they cannot measure progress as the property sector’s charter council has only just been set up. The council will monitor implementation of charter targets.

Tondi says listed property companies and other property players have five years from the date of promulgation of the charter by the trade and industry department to implement it.

The charter has not yet been promulgated. The department’s codes of good practice were promulgated last week, and this will be followed by the promulgation of sector charters.

Mariette Warner, head of property funds at Stanlib, says that excluding listed property companies in the process of merging with others, there are 26 listed property loan stock companies and property unit trusts listed on the JSE. Of these, 10 have black empowerment initiatives in place.

“That is very good progress considering the timeframe is still quite long. Most of the deals have been put in place over the last two years,” says Warner.

But Angelique de Rauville, MD of Investec Listed Property Investments, says it is becoming increasingly difficult to fund empowerment transactions in the listed property sector, where interest rates are relative to listed property yields.

“Fortunately, many of the listed property companies have already commenced the process in an environment where it was a lot easier to facilitate these deals. That environment was when interest rates were lower and listed property yields were higher than the 7% that they are currently trading at.”

In other words, it was less expensive for empowerment players to acquire listed property stock before interest rates started rising and listed property stock became so expensive.

She says if interest rates do not come down or property yields go up it will be harder to facilitate empowerment deals.

“We are not expecting any softening of property yields and a reduction in interest rates is essential if we are going to achieve additional black economic empowerment transactions into listed property,” she says.

Last modified on Saturday, 26 April 2014 09:09

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