Transformation in listed property

INVESTEC: BLACK-OWNED FUND PLANNED Only three out of more than 50 property companies are black-managed.

Many black professionals occupy management roles but few successfully launch property companies. Investec aims to change this.

While black property professionals sit on company boards and occupy management roles, few successfully launch and manage their own property companies. In fact, of 50-odd listed property companies, only three are black-managed.

But Investec Property Fund (IPF) aims to change this.

IPF established a BEE group, Izandla Property Fund, which plans to grow into a black-owned JSE-listed company in the next five years.

Investec Bank arm, Investec Property, plans to support Izandla with skills, expertise and knowledge, while Investec Property Fund will provide capital for future property deals.

IPF CEO Nick Riley said the company didn’t want to only create an empowerment shareholding structure, but for Izandla to use IPF’s skills to create a company that would raise capital and purchase sizable properties on its own. “We are trying to break down the barriers of entry to the property sector.”

Izandla’s major shareholders include the Entrepreneurship Development Trust (EDT) and IPF, which will own a 65% and 35% stake respectively. Izandla has a black female ownership of over 30% and a level two BEE rating.

An Izandla CEO will be appointed and the board will include accountant Sthembile Nkabinde, founder of black-owned private equity and investment vehicle Khulasande Capital.

Izandla will initially start with a R580 million commercial property portfolio, mostly properties transferred from IPF’s property portfolio. Riley said upon listing on the JSE, Izandla could have a property portfolio worth R5 billion. The deal will also boost the empowerment credentials of IPF, which has a level three BEE rating.

The big question is why there’s a dearth of BEE deals in the sector.

As the property industry is capital intensive, many emerging black property entrepreneurs find it difficult to enter the industry. “I don’t think the industry has done a great job in terms of transforming, educating and upskilling professionals. We don’t have black professionals in the industry that are able to raise capital to get into property,” said Riley.

Supporting Riley’s views is Property Sector Charter Council (PSCC) research, which measured the state of transformation against the Property Sector Transformation Charter. CEO of PSCC Portia Tau-Sekati said more focus is required on skills development, management control, employment equity and economic development regarding transformation.

But for Vuyiswa Mutshekwane, South African Institute of Black Property Practitioners CEO, the biggest challenge to transformation in the industry is the lack of commitment. “There is a lot of lip service paid to transformation and that’s why we see an industry that is male and pale. There needs to be the will from the private sector to say ‘we are not just going to give 1% equity but we are actually going to develop companies’.”