Good riddance to poor property fund managers?
reckon things can only get better following the purging of listed property
fund's management team.
Shareholders appear to be breathing a sigh of relief following the purging of the management team of the Johannesburg-listed SA Corporate Real Estate fund. In an unusual move, Old Mutual revealed this week that that it was cutting lose the fund's managers.
This follows a period of disappointment to shareholders on the back of a growth-at-any-price type strategy. The share price has taken a hammering in recent times, but barely moved after Old Mutual made its announcement on Wednesday.
Old Mutual Investment Group Property Investments (OMIGPI) said it was restructuring and a decision to have fund managers relocate to Cape Town had resulted in six of the senior managers leaving SA Corporate Real Estate (JSE: SAC).
In a media statement , managing director of OMIGPI Ben Kodisang said the company and the departing management have reached an agreement on a hand-over period of between three and six months and the current executive directors will continue as directors until further notice.
Colin Young, head of institutional property investments at OMIGPI, has been appointed as the new fund management executive for OMIGPI and will be responsible for managing the SA Corporate transition team, said the statement.
Speaking to Realestateweb.co.za, Young said shareholders have no reason to worry as this is a positive move and, with time, it will impact positively on the share price.
He said the six senior management people who are leaving the company are Craig Ewin, CEO, Roger Perkin, Peter Sparks, Lauren Tapping, Paul Nel and Wendy Raffinetti.
Young said the company offered packages to the executives but all did not feel comfortable with the idea of relocating to Cape Town.
The decision was taken at the beginning of March and the executives all filed their documents last week.
Asked where he is going, Ewin said he has no firm arrangements. He said he is committed to the transition period and will consider his options thereafter.
Analysts' take on SA Corporate Real Estate news
A market analyst who spoke to Realestateweb.co.za said there will be minimal change as the portfolio remains the same. The analyst said perhaps management's credibility will be enhanced with the departure of the old team.
Meanwhile Vuyani Bekwa, from Investec Property, said given that Old Mutual runs the management company for SA Corporate, it does not expect the change to be drastic. He said he could only be confident on the company's direction once a new CEO has been appointed. He said he does not see any reason to worry about the company's strategy, which is to retain tenants and dispose of non-core assets.
Bekwa said the share price ended the day 0,8% down and in line with the market. As for the handover period agreed on between management and the departing executives, Bekwa said when such a large number of executive directors and senior managers resign, the take- over period could take as long as six months. The hand-over period is therefore justified.
Zayd Sulaiman, analyst from Catalyst Fund Managers, said this is the first time that a Property Unit Trust (PUT) which has an external management company has replaced its entire management team.
The replacement of an entire management team has to be very well managed and the calibre of the new management is important as property skills are generally very thin in South Africa, said Sulaiman.
The share price has already been punished due to recent poor results, which have been attributed by some to poor management.
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Article by: Denise Mhlanga - www.realestateweb.co.za