Good Buy Opportunities In The SA Property Sector

Right now, says Mike Flax, the Executive Director of Redefine Properties responsible for acquisitions and mergers, the South African property sector presents companies like Redefine with a scenario that is extremely favourable for accretive deals capable of enhancing a property company’s bottom line. “Several factors,” said Flax, “have come together to create good buy opportunities for a group like Redefine which has both cash and credit resources on tap.

“Firstly, many of those landlords who built their portfolios on debt are now under pressure from the banks to de-leverage and have been forced to dispose of properties at below market value.  This obviously works in favour of those companies able to buy right now.

“Secondly, the listed property sector has performed far better than most anticipated and at Redefine this has resulted in the share price rising 8,5% in the first quarter of the year (against 5,5% for the overall listed property index).

“This, in turn, means that the capitalisation rate on our Redefine units is lower than the yield obtainable on quality, available properties, making it logical for us to place our stock and build the property portfolio.  The net “profit” on these transactions ultimately, of course, goes to the shareholders.”

Redefine, said Flax, could spend up to R8 billion on acquisitions in the next 12 months.  This figure could include the probable incorporation of Hyprop with its high value portfolio containing such properties as Canal Walk, Hyde Park Centre, Rosebank Mall and The Glen Shopping Centre.

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