A follow-up empowerment deal has ensured that property loan stock company Growthpoint Properties will take pole BEE position among its peers on the JSE.
This is not to say Growthpoint's BEE credentials are something to write home about. With a total BEE score of 41,4%, Growthpoint falls outside the top 50 in the overall 2006 Top Empowerment Companies' ranking.
The fact that Growthpoint leads in its sector is a poor reflection of the entire JSE property sector. But then in the land of the blind, the one-eyed man is king.
Growthpoint is followed by Emira Property Fund in second position and Hyprop Investments.
The company fully supports the principles of empowerment and was actively involved in the property sector transformation charter. It says it will continue to pursue the expected targets for procurement from black empowered entities and invest in socially responsible projects, assisting in the development of black-owned enterprises.
Growthpoint is the largest property holding group on the JSE, with assets valued at more than R15bn and a market capitalisation of more than R10bn.
The group embarked on its first notable BEE initiative in 2005. This was when it concluded a R1bn transaction which transferred about 14% of its linked units to a BEE consortium featuring Bulelani Ngcuka and former Anglo American SA MD Lazarus Zim.
That BEE holding has since been diluted as a result of circumstances beyond the control of Growthpoint. As a property loan stock, Growthpoint expands its asset base through acquisitions of other property portfolios, which is realised through the issue of new linked units. Acquisitions concluded after the 2005 BEE transaction have thus diluted the rights due to the BEE holding.
Acquisitions concluded recently include the takeover of the Metboard portfolio for about R2,4bn and the R1,5bn Tresso portfolio of 24 properties. Growthpoint is on the verge of concluding a takeover of the listed Paramount Property Fund's portfolio in a transaction worth about R3bn. If successfully concluded, the transaction will boost Growthpoint's asset value to about R18bn.
But then the rights due to its 2005 BEE transaction partners would be significantly diluted, from the initial 14% to below 10%.
That could be a drawback to Growthpoint's commitment of meeting the property sector charter requirement of transferring 25% of linked units to BEE groups within five years. To ensure that it does not drift further from the property sector transformation targets, Growthpoint concluded a second BEE equity transaction in December last year. This transaction, worth R280m, transferred 2,3% of Growthpoint linked units to Phatsima Properties - an empowerment entity led by well-respected black businessman Herman Mashaba.
