Paretobemoanslackof transformation

It is time for a change in mindset or for new leaders, says chief executive

PROMINENT national retail property developer and investor Pareto has again bemoaned the lack of transformation in the sector.

Marius Muller, the chief executive of Pareto, which is wholly-owned by the Government Employees Pension Fund, claimed on Wednesday that there was little commitment to real transformation from the executive leadership of the listed property sector, and it was time for a change in mindset or for new leaders that would make transformation a priority.

“It’s time for us to be frank about the situation. The fact is that BEE (black economic empowerment) executive directors make up just 15.7 percent of the leadership of the listed property sector. This is a clear indication of the slow pace of transformation at executive management level,” he said.

Analysed

Muller referred to the latest results of a study by IPD South Africa that analysed the composition of the leadership of South Africa’s listed property sector.

Of the 89 executive managers at JSE-listed property companies, 75 executives or 84.3 percent were white and black executives made up just 14 positions, with only one of those being female, he said.

“Executive directorship level is where the executive decisions of companies are made. This is where real transformation needs to take place and the skills and property expertise of new black directors needs to be fostered.

“Of the 14 BEE directors, only four hold positions within previously established white businesses. Surely one would have expected greater transformation at the leadership level after 21 years of democracy.

“If you dig a little deeper, you’ll also discover that one of the 14 BEE executives is featured twice and two executives are in acting chief executive positions. The majority of these black directors did not rise to their positions as part of established business. In fact, most of them have come from black business and largely on the back of government transformation initiatives through, for example, the Department of Public Works,” he said.

Muller said it was time for serious introspection by the listed property sector because “the jockeys” leading the in- dustry were clearly not driving the real transformation of the sector. But unfortunately he did not believe the current white dominated executive leadership of the listed property sector had reason to transform.

“Most of these companies don’t deal with government, so there is no business imperative to undertake serious transformation,” he said.

Muller said the only way things would change was if there was a commercial benefit and, for example, the government introduced tax incentives to foster greater BEE or the government followed a more stringent approach and made BEE mandatory for companies.

Laurence Rapp, the chairman of the SA Real Estate Investment Trust (Reit) Association and chief executive of listed property fund Vukile, said from a South African Reit perspective, transformation was high on the agenda and enjoyed a high priority at executive meetings of the association.

“Certainly it is something we are devoting attention to, but ultimately it is up to the individual funds on how they want to implement BEE… (But it) takes time and the funding of transactions is challenging.”