A leg up in property

Marriott to be absorbed into Old Mutual Properties, and will have assets in excess of R32bn, although Marriott Bank and the Durban head office are not part of the deal, and these remain within the Marriott Holdings business.

Roddy Sparks, MD of Old Mutual SA, says that this is a real leg up in the property market, while Ben Kodisang, MD of the business, is excited and says its about growth and acquisitions.

Size isn’t everything says Sparks although the business is double the combined size of its nearest competitor – Stanlib and Liberty at R18bn, followed a long way off by Sanlam, in third place with R10bn in assets under management.

The physical assets will be in the region of R17bn, and R3.9bn in third party property management, and R14.8bn in listed assets

The regulatory approval process is still to be tackled – the submission is yet to be put to the authorities and Kodisang reckons it could take between three and six months, before a decision is taken, either way.

“This won’t stop us from putting our plans together and getting ready for the integration,” says Kodisang.

There are five business units within the new group, including an asset management business, and this brand (Marriott) would remain as the thinking is that the Marriott brand is associated with property, while the Old Mutual is not.

Kodisang maintained that there wouldn’t be any retrenchments as both organizations essentially do different things.

Simon Pearse, CEO of Marriott, says that it’s an unusual transaction. “We are in the same space (property) but do different things. And now we effectively have a complete property business, something that neither of the two parties had before.”

Pearse maintains that listed property behaves differently to unlisted property and they have some ideas about providing products to the pension funds industry.

In terms of BEE Sparks said that they would wait for the property charter to see the light of day before they start making supplementary deals, although Old Mutual did announce their BEE deal earlier this year which means that Marriott becomes 17% black-owned.