HYPROP Investments has announced it is “no longer a party” to merger discussions with the Madison stable of listed property companies.

Madison is the asset manager of Redefine Income Fund, ApexHi Properties and Hyprop.

In March, the Madison stable, including Hyprop, issued cautionary announcements saying they were considering a proposal that could see them merge into a single fund that would have created the largest listed property counter.

Madison, ApexHi and Redefine all issued cautionary announcements yesterday, saying they were considering an “amended proposal” which, if implemented, would result in a merger of the three.

Pieter Prinsloo, MD of Hyprop said Madison and its advisers JP Morgan and Java Capital had approached some of Hyprop’s major unitholders who had indicated they would “prefer not to see Hyprop as part of the merger discussions”.

Prinsloo said they would prefer to see Hyprop remain as a stand-alone retail-focused property fund.

“That is all I can say,” he said.

At the time of the March announcement, listed property analysts indicated Hyprop unitholders would probably not be in favour of it merging into a diversified fund as they preferred it retaining a specialised retail focus.

Hyprop’s market capitalisation is about R6,8bn and has property assets valued at about R8,5bn.

If the merger had been successful at the time of the first cautionary announcement, it would have created a group with a market capitalisation of R24bn-R25bn, making it bigger than Growthpoint Properties. Growthpoint is the JSE’s largest listed property company and had a market capitalisation of R17,7bn at the end of March.

Since then, listed property prices have tumbled because of a higher interest rate environment and general global market woes.

As a result, a successful merger between Madison, ApexHi and Redefine at current listed property prices would result in a property fund with a market capitalisation of about R16bn, putting it on a par with Growthpoint.