Chaim Cohen, who has built high-profile residential projects such as the Emperor in the Sandton CBD, has joined the return of property developers to the JSE.

Cohen has taken over listed shell Anbeeco as the vehicle, and will relist it on AltX in the next few weeks as Quantum Property Holdings.

Developers are appearing on the JSE for the first time since the 1960s, when there were about 30 of them and they were the darlings of the bourse. They offer an alternative to listed property funds, which are looking quite expensive. Cohen is the third to arrive on the JSE, after Acc-Ross and IFA last year.

WHAT IT MEANS
The company will have only one asset
Growth is expected to derive from tourism

 
The FM will in future weeks be exploring developers as well as the funds, in search of the ideal listed property portfolio.

The company is 95%-controlled by Cohen as chairman, Gary Itzikowitz as CEO, and their partners. Other directors are Mark Taitz (financial), Erwin Schmidt (dealmaking), Lazarus Mogudi and Leonard Phathela. The last two are medical doctors who have been in development for some years - and "are not black economic empowerment partners", says Itzikowitz.

The company launches with a proposed sectional-title five-star, 129-room hotel, spa and wellness centre. Next to the planetarium at Cape Town's Company Gardens, it has residential units, a small retail centre and parking.

Says Itzikowitz: "The hotel in Cape Town is the starting point, because tourism is a major growth area and Cape Town is a focus of tourism growth."

Whereas Acc-Ross is a township developer and IFA builds big resorts, Itzikowitz says Quantum will have a "multi- silo approach" picking up opportunities in commercial property investments, trading, new development, project management and others.

The partners are selling the hotel development, whose land cost them about R16m in 2003, to Anbeeco for R30m plus any cash in the project. Payment is by issuing Anbeeco shares and a maximum of R10m in cash. About 120m Anbeeco shares will be issued.

Itzikowitz says Protea Hotels has signed a management contract to operate its premium African Pride brand.

Cash will flow to Quantum from the sale of hotel rooms and flats, with prices ranging from R2,4m to R18m. Quantum will retain the 3 500 m² retail space and 50% of the hotel management company and facilities. Cohen's company, Newcity, will be the development manager.

There are some potential concerns that the FM put to Itzikowitz:

• 
  Cohen's company will earn management fees while he chairs Quantum;
• Cohen and Itzikowitz will benefit from the sale of the hotel;
• Cohen is part-time; and
• What is to stop the directors from doing private deals in the background?

"This is our primary business and Cohen is the only director with any interest in Newcity," says Itzikowitz. "We will ensure that Newcity performs and is paid appropriately. We are effectively putting the project in at cost and we will be putting all the appropriate deals we find into the company."

Another concern is that the directors control 95% of the shares. There is little free float and a huge opportunity to manipulate the share price. "It never occurred to me that such a situation was possible and it certainly isn't our intention," says Itzikowitz. "We will operate completely transparently. We will also be issuing shares for deals and so dilute our holdings. But we do intend keeping control. Also, we are moving from a nonregulatory private environment to a regulatory one. We are well aware of the need for transparency and that our every move will be watched."

Quantum will have only one asset, so there's no spread of risk. "Does anybody complain when a successful listed company has one kind of business?" retorts Itzikowitz. "It's an outstanding opportunity on its own, particularly with the expected growth in international tourism. The directors have vast experience in all types of property." He says new deals now being negotiated will be coming thick and fast.