Pretoria - A new property group with assets of R32 billion is set to emerge from the proposed acquisition by insurance giant Old Mutual of Durban-based asset management business Marriott.
Neither Old Mutual nor Marriott was prepared to comment on the value of the transaction yesterday. The deal is effective from July 1 this year but still subject to competition commission, SA Reserve Bank and other regulatory approval. However, industry speculation is that it will be worth more than R400 million.
The transaction involves the property fund management, listed property company management, property services and asset management businesses of Marriott but excludes Marriott Corporate Property Bank, which is the subject of separate negotiations, and Marriott's Durban head office.
Roddy Sparks, the managing director of Old Mutual South Africa, said yesterday that this "significant acquisition" would "give us a leg up in the property market".
He said it was a key step in Old Mutual Properties' increased focus on asset gathering and asset management in addition to property management.
"Marriott has a unique focus on income management, a strong brand and a good presence in its chosen niche markets. This transaction will result in significant synergies to grow assets." Sparks said it was a friendly acquisition and Marriott had singled out Old Mutual Properties as the best possible suitor.
The acquisition follows the announcement earlier this week of the creation of Vusani Property Investments, a new force in the commercial and retail property sector with assets valued at R500 million. Vusani is 70 percent black owned, with Sanlam Properties holding the remaining 30 percent.
Ben Kodisang, Old Mutual Properties' managing director, said the acquisition would position the combined business, provisionally known as the Old Mutual Property Group, to become the leading property force in South Africa and beyond its borders.
"We are looking to help redefine the property sector by co-operating with other major investment groups to firmly establish an investor-friendly industry, a consistently attractive asset class offering a reliable, growing property income stream. We want to create truly large, liquid listed property funds."
Kodisang said the proposed Old Mutual Property Group would have five business units focusing on fund management; management of listed companies, including Martprop, SA Retail, Ambit and Oryx; international operations; third party business; and its institutional portfolio.
Marriott has R20 billion of property-related assets under management, including R10.8 billion listed equity and real estate shares; third party mandates of R3.9 billion; and properties housed in listed property companies of R5.3 billion.
Old Mutual Properties has R12 billion of assets under management, comprising R8 billion of institutional property and R4 billion in listed assets.
Colin Young, a listed property executive of Old Mutual Properties, said the merged entity would control 19 percent of the listed property sector if the transaction was approved.
The deal will result in the transfer of about 300 Marriott employees to the Old Mutual Property Group but Kodisang said there was very little duplication between the two companies and retrenchments were not expected.
Marriott chief executive Simon Pearse said Marriott would gain from the strengths of Old Mutual, including its empowerment status, which would in effect make Marriott 17 percent black owned. Another benefit to Marriott was greater exposure to the retirement funding market through Old Mutual's corporate distribution capability.
