Pretoria - After listed property firms Octodec and Premium Properties issued cautionary announcements almost simultaneously on Friday, the market is speculating about a merger between the two.
The announcements were identical except for the names of the companies. Each advised linked unitholders that the firm had entered into negotiations which, if successfully concluded, might have a material effect on the price at which the linked units traded on the JSE.
The announcements advised linked unitholders to exercise caution when dealing in the units until a further announcement was made.
Octodec and Premium Properties are both managed by City Property, which is owned by the Wapnick family, who are substantial shareholders in both Octodec and Premium Properties.
Jeffrey Wapnick, the managing director of City Property, who is an executive director of both Octodec and Premium Properties, said yesterday that he could not comment on the cautionary announcements.
But Wapnick said he wanted to try to finalise "this matter quite quickly, within the next few weeks".
Leon Allison, a property analyst at Macquarie First South, said the Wapnick family were large shareholders in both Octodec and Premium Properties and might be merging the firms or buying out minorities and delisting them.
He said there were too many smaller listed property funds and further consolidation of the sector was necessary. Such consolidation has already resulted in several firms being absorbed by others and being delisted.
Deals include Growthpoint's acquisition of Primegro several years ago; Growthpoint's recent acquisition of all the linked units it did not own in industrial property firm Metboard, in a transaction valued at more than R2.7 billion; and the proposed acquisition of Spearhead by Redefine in a deal valued at R1.3 billion that still has to be finalised.
Both Octodec and Premium Properties are minute compared with Growthpoint, the largest property holding and investment firm listed on the JSE, with assets exceeding R15 billion.
Octodec owns a portfolio comprising retail, commercial and industrial properties. Its retail portfolio comprises five shopping centres, including Killarney Mall in Johannesburg. Its assets at the end of February exceeded R1.4 billion. Premium Properties owns a portfolio of commercial, business, residential and industrial properties, which were valued at R1.3 billion at the end of February.
Octodec reported growth of more than 34 percent in distributions a linked unit to 42.5c in the six months to February. Premium posted a 22 percent rise to 61c in distributions a linked unit in the year to February.
Octodec's linked units rose 3c to R12.03 yesterday, while Premium Properties units fell 80c to R8.50. The real estate sector gained 0.82 percent.