Finweek English Edition - - Companies & markets - JOAN MULLER

BIG­GER MAY NOT AL­WAYS be bet­ter, but as the listed prop­erty sec­tor’s con­sol­i­da­tion drive hots up, size is be­com­ing an im­por­tant con­sid­er­a­tion for prop­erty pun­ters. Af­ter all, big­ger funds tend to of­fer more di­ver­si­fi­ca­tion and liq­uid­ity than do their smaller coun­ter­parts.

Emira Prop­erty Fund, in the RMB Prop­er­ties stable, is one of a num­ber of real es­tate coun­ters now go­ing the merger & ac­qui­si­tion route with the pro­posed buy­out of sis­ter fund Free­stone Prop­erty Hold­ings. The merger will see the size of its port­fo­lio swell from R3,5bn to more than R5bn and will no doubt see Emira ap­pear more reg­u­larly on fund man­agers’ buy­ing lists. OP­POR­TU­NI­TIES • The Free­stone merger is likely to cre­ate more de­mand

for Emira scrip, sup­port­ing fur­ther share price growth. • The op­por­tu­nity to lower debt fund­ing costs through its par­tic­i­pa­tion in Free­stone’s ex­ist­ing com­mer­cial mort­gage-backed se­cu­ri­ti­sa­tion pro­gramme. Re­la­tion­ship with RMB Prop­er­ties and Mo­men­tum cre­ates on­go­ing deal flow op­por­tu­ni­ties: R850m worth of prop­erty was al­ready in­jected into Emira via those two sources last year. • Some 26% of Emira’s leases are up for re­newal this year,

cre­at­ing scope to sign new ten­ants at higher rentals. RISKS Still bat­tling with down­ward rental re­ver­sions on a few in­dus­trial prop­er­ties. Re­cent ac­qui­si­tions have di­luted earn­ings some­what, plac­ing short-term pres­sure on dis­tri­bu­tion growth. Like other real es­tate funds, Emira is ex­posed to the risk of fur­ther in­ter­est rate hikes.


Source: I-Net Bridge

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