Saibpp by Afrimage Communications

PROPERTY FOCUS l NOVEMBER 2014

EDITORIAL

Time to implement

Tel: 011 838 6722 Fax: 011 838 6721 E-mail: Services@saibpp.co.za Address: Vusa House, 5th Floor, Suite 2 Gandhi Square Johannesburg www.saibpp.co.za

South Africa’s 20 years of democracy have introduced massive and irreversible changes to our country’s socio-economic landscape. What had once been thought of impossible became possible. We saw this in our own property industry. New black property moguls such as Sisa Ngebulana, Sandile Nomvete and Izak Petersen not only emerged but managed to raise necessary funds to list their property funds on the Johannesburg Stock Exchange (JSE) where they compete and hold court with the best and the brightest property minds in the country. Such developments are inspiring. But more still needs to be done to transform the sector. Some established companies continue to pay lip service to transformation despite the existence of the Property Charter. That is why SAIBPP appeals to government – the biggest tenant and landlord – to use its massive influence to bring about drastic change to property. As the main story on page 30 says, government can do so by implementing its own policies. Our country has some of the world’s most enlightened policies. It’s now time to implement and enforce them. Why do we so strongly believe in transformation? It’s simple. Transformation goes hand in hand with black economic empowerment, which cuts across all sectors of our economy. Black economic empowerment leads to economic growth, which means the country’s tax base increases, enabling government to embark on infrastructure development. It leads to skills and money remaining in the country since companies would be based in South Africa. It leads to social stability since it creates jobs. So, it’s not a nice to have, but a must-have. Over the years, SAIBPP has been lucky to have visionary presidents leading our boards. On page 14, our past presidents look back on the journey they have travelled, reminiscing about the hurdles they had to jump to grow SAIBPP. Along the way, we also played our part in transforming the sector by starting a bursary programme, with the help of Pareto, to help groom the next generation of property leaders. Two recipients of this bursary are currently at Wits University doing their junior degrees in property studies (page 55). This edition is also jam-packed with insights from various property industry players – Marius Muller, Maurice Mdlolo, Norbert Sasse, Thabo Ramushu, Kundayi Munzara to name but a few. They speak with authority and eloquence about how they see transformation working. Also sharing their insights from a gender perspective are four enterprising women who have made it big in the property sector (page 48).

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Happy reading. Tshepo Matlala SAIBPP President 1

PROPERTY FOCUS l NOVEMBER 2014

CONTENTS — November 2014 pg 14 Past presidents look back

04 08

SAIBPP BOARD | Meet the board OPINION | We need to capitalise on transformation gains

OPINION | Where there is a will there will always be a way

FEATURE | Past presidents look back

PROFILE | Matlala calls for action

FEATURE | The highs and lows of the past 20 years

OPINION | Strategy needed to accelerate pace of transformation

FEATURE | Property Sector Charter Council

OPINION | A pressing deadline

FEATURE | Women in property

FEATURE | A priceless investment

OPINION | Who is pulling the trigger

FEATURE | How transformation fosters social stability

FEATURE | Lost chance to shake up industry

– By Maurice Mdlolo

– By Hosia Malekane

– By Phakama Mbonambi – By Phakama Mbonambi – By Thabang Mokopanele pg 35 The highs and lows of the past 20 years

– By Hatla Ntene – By Phakama Mbonambi – By Marius Muller – By Thabang Mokopanele – By Phakama Mbonambi – By Kundayi Munzara (Sandile Nomvete)

pg 55 A priceless investment

(Sisa Ngebulana)

FEATURE | Amelia focuses on education

OPINION | We’ve always understood the need for empowerment

– By Phakama Mbonambi – By Norbert Sasse

SAIBPP BOARD

Images: Johannes Dreyer

Meet the board These property professionals bring wealth of expertise to ensure SAIBPP fulfils its mission of advocating for transformation

Kholoro Thomas Matlala is the Managing Director of MatReal Property Services in Johannesburg. He is President of the South African Institute for Black Property Practitioners (SAIBPP) and is a board member of the Property Sector Charter Council, and he is also the Head of Policy for the Black Business Council (BBC). Matlala was part of a team that started the following companies: N3 Toll Road Company, e.tv, and Cell C, the 3rd largest cell phone company in South Africa. Among Kholoro’s recognised professional work is his involvement with Lawyers for Human Rights, JHI, Transnet, Ubambo Holdings and Inani Real Asset Management.

Nobenguni Nonkululeko (Nkuli) Bogopa Nkuli Bogopa is a dynamic, hard-working professional with 11 years’ experience in the corporate real estate sector. Her extensive knowledge of the property field is enriched by her architectural studies and practical experience handling a wide spectrum of portfolios in the following sectors: financial, petro-chemical, retail, commercial and mining. She is Group Property Manager at Rio Tinto for Africa region. She recently completed the 2014 Archbishop Desmond Tutu Fellowship Leadership Programme at the SAID Business School at Oxford University. She was also listed in the 2013 Forbes Africa magazine as one of South Africa’s rising stars, with a huge potential and talent in the mining and industrial sectors.

PROPERTY FOCUS l NOVEMBER 2014

SAIBPP BOARD

Chulumanca Nomlomo After graduating from the University of Cape Town with a BSc in Property Studies, Chulu worked for three years for Eris Properties (development team) where he gained extensive experience in both retail and commercial projects: planning, feasibility, rezoning, budget, financial modelling, presentations and costing as well as drafting tender documents, joint venture partnerships, planning applications and the legalities within property development. He later moved to Saints Holdings (trading as Buna Group) where he further honed his entrepreneurial skills. At SAIBPP, Chulu has been involved with the establishment of a scholarship programme for previously disadvantaged students studying Property Studies at Wits. He is busy completing his Master in Business Administration Programme through the Regent Business School.

Dumisane Malinga Dumisane is chairperson of SAIBPP’s communications, events and marketing committee. Dumisane started his professional property career in 1998 when he joined the Department of Public Works’ leasing division, and between 2000 and 2004 he worked at the Airports Company South Africa as a Property Portfolio Manager as well as an Operations Manager. Between 2004 and 2006 he worked at Dijalo Property Services as a Leasing and Sales Manager. From 2006 to 2012 he was an Executive Director at Motseng Property Services. He is currently a partner and a Chief Operating Officer at Full Facilities Management, a property and facilities management company that is based in Woodmead, Gauteng. Dumisane is studying towards an MBA degree, and he holds a Post-Graduate Diploma in Business Management and various qualifications from the Wits Business School. 

Johan Brandt Johan, who joined SAIBPP in 2007 and its board in November 2013, is a member of the stakeholder committee at SAIBPP. Johan is very passionate about the property industry and really wishes to positively influence the lives of other black entrepreneurs by helping to unlock opportunities previously denied to them. Johan has more than 20 years of experience in municipal account and utility management. His career started at the City of Cape Town Municipality, in the Helderberg Municipality, where he worked in various departments, including meter reading, municipal account billing and account reconciliations, and the correction of erroneously billed municipal accounts. In 2005, after relocating to Johannesburg, he worked for Johannesburg Water, as well as various property and utility management companies. Due to his vast experience in the utility management field, Flamiprox Utility Managers was founded in which he serves as director. 

Thabani Mathonsi Thabani is on SAIBPP’s learning and growth committee as well as marketing and communications committee. His experience in the property sector dates back to 2004. In 2011, he partnered with Sibusiso Tshabalala to start Nanisa Capital, which, among other things, focuses on property and facilities management, acquisition, and property development. The company specialises in the development of student accommodation and low-cost housing. He is also a property broker for Alcus Property Group. His experience in property spans from strategic marketing and advertising to talent and events management. 

SAIBPP BOARD

Philasande Bongo Philasande has an in-depth knowledge of the property sector and the sourcing and structuring of required capital from various roles within the real estate finance divisions of various banks for development projects and turnkey acquisitions across the country. He is currently employed as an investment officer within a private equity firm that is focused on direct investments within the residential property sector, targeting the affordable and middle-income housing market.

Since graduating from Wit University, he has gained vast industry experience and cultivated strong relationships and networks. He recently attended the 2014 One Young World Summit in Dublin as a delegate representing South Africa, one of the 186 countries that took part at the summit. A social entrepreneur, he is also a mentor in the recently launched online entrepreneurship portal that connects young entrepreneurs with experienced and inspiring business leaders across Africa. He was also a part of the task team that sought to support efforts by the Black Business Council to establish future industrialists. 

Onalenna W Mothusi Onalenna has been in the property industry for six years, focusing mainly on the property management and facilities management. She is currently establishing herself as an entrepreneur in the property industry. Onalenna also chairs the Institute for Property Studies, a non-profit organisation that creates awareness among learners, particularly in rural areas, about career opportunities in the property industry. She’s director at OM Holdings, a company that focuses on property and facilities management, acquisition, and property development. 

Nthabiseng Ramoipane Nthabiseng has almost 10 years financial experience, which was gained mostly from her tenure at KPMG. She joined Dijalo Property Services in 2012 and is responsible for financial services of the entire Group, including sourcing funding for all Dijalo projects. She sits on the board of SAIBPP as well as serves on the organisation’s finance and learning and growth sub-committees. 

PROPERTY FOCUS l NOVEMBER 2014

SAIBPP BOARD

Lynette Ntuli Lynette is the founding director and Chief Executive Officer of Innate Investment Solutions, a property, asset and infrastructure development and solutions firm. A commerce graduate, Lynette has previously held positions at Deloitte, Motseng Marriott Corporate Property, Motseng Property Services and the Durban Business Enhancement Initiative in various senior leadership roles in the commercial and retail property sector and in the business development and investment promotion arena. Lynette is actively involved at an executive and member level within various property organisations, including the Business Women’s Association, International Women’s Forum (IWFSA), Women’s Property Network (WPN), Institute of Directors SA (IODSA), South African Property Owners Association (SAPOA), the South African Council of Shopping Centres (SACSC) and the South African Institute of Black Property Practitioners (SAIBPP). 

Felicia Sao Felicia Sao is a professional architect registered with the South African Council of Architectural Professions (SACAP) and a member of the Royal Institute of Chartered Surveyors (RICS). Felicia graduated from the School of Architecture at the Nelson Mandela Metropolitan University with B.Bldg. Arts and Masters in Architecture (Prof) degrees. Later, she acquired an MSc in Building (Property Development and Management) from Wits University. She attributes her career success to her days as an architect where she gained immeasurable experience in architectural

services, urban planning and project management. Her work experience, starting in 2002, as an architect for MMA Architects gave her insight into the world of construction and property development. She then decided to become more involved in the property development space. Felicia is Manager of Property Development at O.R. Tambo International Airport, where she is responsible for the optimisation of the non-aeronautical new investment property portfolio to drive sustainable value creation and annuity income for the Airports Company South Africa’s stakeholders. At SAIBPP, she is a board member (director) and the chairperson of the stakeholder committee. 

Hawa Kisten Hawa is office manager at SAIBPP and has been in this dynamic property industry since 2009. The mother of three says working for SAIBPP has positively pushed her limitations in ways she had never thought possible. It has allowed her to step into her true power and take control of all situations she faces. She is self-motived, a necessary attribute when in charge of an office and employees. She has self-discipline to meet high standards of excellence, paying attention to detail and time, which has allowed her to maintain positive professional relationships with SAIBPP members. She’s enthusiastic, flexible, adaptable and assertive when it comes to work, tasks and getting things done. With her unwavering determination, SAIBPP has turned her into a “winner”. 

OPINION

capitalise We need to

on transformation gains

PROPERTY FOCUS l NOVEMBER 2014

OPINION

South Africaâ&#x20AC;&#x2122;s real estate industry has slowly embraced transformation, but a lack of young black professionals ready to take the reins from the older, ground-breaking generation of black property owners and developers is a concern By Maurice Mdlolo

OPINION

here is little doubt that the real estate industry has taken a keen interest in transformation. Thanks to various empowerment funds, a commitment from well-established firms to black economic empowerment and a drive by government, South Africa has made great strides in the past 20 years, particularly with regards to black ownership in the commercial property arena.

the Resilient Property Group deal, which not only empowered black individuals, but also went a long way towards empowering women. Women from various provinces were brought together to form a consortium in this ground-breaking deal. Consider the knock-on effect this has had for these previously disenfranchised individuals, their families, their communities and other industries.

The South African Institute of Black Property Practitioners (SAIBPP) has been at the forefront of black empowerment and must be commended for its good work, the fruits of which can be seen in the increasing number of black-owned listed companies and the property funds they subsequently established.

Additionally, we saw the Redefine Properties brokering the deal that led to the creation of the Dipula Income Fund, which can also be counted among the property industry’s transformation highlights. In operation since 2005, the Dipula Fund has created wealth for various industry players, and has lofty aspirations of becoming the leading property loan stock company in South Africa. Regardless, if Redefine had not had the foresight to broker this deal,

SAIBPP has been the voice and the force driving some of these transformation changes. Consider 10

where would this organisation or these individuals be today? In 2010, Rebosis, which was established by private black individuals as an offshoot of the Billion Group, became the first black-managed and substantially black-held property fund to be listed on the Johannesburg Stock Exchange (JSE). We’ve also seen some of the well-established listed companies driving black ownership in their companies, leading to an increase in black-owned assets and the number of black shareholders in South Africa. All these are significant achievements in our industry’s transformation path. Yet, despite our good progress, depending on who you ask transformation has not been at an acceptable pace. There is justified debate around whether transformation is moving fast enough, though there is a clear positive outcome on which

PROPERTY FOCUS l NOVEMBER 2014

OPINION

we can reflect – the eargeness of government and many key industry players to commit to the transformation process. Government’s continued support and incentives are key transformation drivers. Their continued commitment to not entering into lease agreements with landlords who are not empowered has definitely helped drive transformation and has helped to bolster property funds such as Delta, which listed on the JSE in 2012. These deals, coupled with governmental support, have gone a long way in cementing the industry’s transformation efforts. In order for South Africa to unlock the industry’s full economic potential, a new impetus is needed to ensure that the new broad-based black economic empowerment (B-BBEE) codes are implemented and used as a tool to speed up transformation in the sector. The industry must also be commended for embracing government’s new B-BBEE scorecards and, once again, we can see that property owners

South Africa’s next generation of real estate owners and developers. When I look around the property industry, it’s apparent that there is a need to develop and promote young black professionals with the necessary skills to lead the sector in the future. Too many young professionals who are brought into the industry seem to fall by the wayside. Too often they simply disappear, and it is concerning that more is not being done to keep them in the industry. At Liberty, we have a proud history of transformation, having had two former SAIBBP Presidents, Caswell Rampheri and Kgaogelo Mamabolo, who have played a significant role in transforming the industry in the past 20 years. We are proud of our history of employing senior black management – a testament to our commitment to transformation. Something that has been equally important to us is driving transformation among our suppliers.

As the industry continues to grow and the ownership of property continues to diversify, developers have to recognise new talent. and developers are keen to embrace what government is trying to do. Government’s new B-BBEE codes will go a long way to accelerate the rate of transformation in the property industry. While some consider the rate of transformation to be satisfactory in some cases, we need to ensure that broad-based ownership is driven a little bit faster than before. Personally, I have a major concern around the development of young black talent,

transformed. We have recognised that the South African shopper has changed in the past two decades and we adapted to that change when it comes to the services and products being offered in Sandton City, Nelson Mandela Square, Eastgate Shopping Centre and Liberty Promenade Shopping Centre. Consider for a moment the far-reaching effects of the real estate industry’s transformation: by adopting BEE codes and new industry regulations, we have seen the rise of new businesses, the creation of employment and the empowerment of the previously disadvantaged. We are enjoying the rise of the black middle class, which is changing the way we do business. I am particularly proud of the Liberty Promenade Shopping Centre, a worldclass development in the heart of Mitchells Plain that would not be out of place in Constantia or Sandton. Transformation remains a challenge for all business sectors in South Africa. In the property sphere we need to be cognisant of the progress we have made as well as the challenges we currently face.

In recent times, we have insisted that many of our service providers, through the procurement process, partner with black empowered firms in order to work on our projects. We continue to push this agenda with the goal of ensuring skills transfer from more established firms to emerging blackowned ones.

As the industry continues to grow and the ownership of property continues to diversify, developers have to recognise new talent. Young black professionals need to be welcomed into the industry and taught the ropes so that they can pick up where current developers and property owners will eventually leave off. The strides that have been made in terms of transformation are too significant to not be capitalised on for future generations. 

Furthermore, we pride ourselves in the way our properties in the retail sector have adapted as our society has

Maurice Mdlolo is Managing Director of Liberty Group Properties (Pty) Limited. 11

OPINION

Where there is a will there will always be a way By Hosia Malekane

he property industry is referred to as the biggest business in the world in terms of dollar value and the number of people who participate in the value chain. Compared to other sectors, the property industry has the greatest chance in changing the course of history. It is the best environment in which new ideals could be implemented and accomplished. The sheer size of the industry means that there will be immense resistance from those who have always considered themselves self-anointed beneficiaries. But change has to happen. It’s beneficial for all. Sam Ngumeni, the COO at Woolworths, says: “Transformation is about managing the successful evolution of a business culture.” It should never be a ticking box exercise in order to comply with B-BBEE codes. Also, transformation is not confined to race, but extends

to gender, religion, perspective, experience and many other aspects of diversity. Our history has been distorted by various apartheid laws, including the infamous Natives Land Act of 1913 and the Group Areas Act of 1950. Generations of black people could not fully participate in the economy both as landowners and services providers. The entrepreneurial spirit of selfdevelopment was subdued by these vicious cycle of laws that not only disenfranchised our people in their own country but stifled their economic empowerment. The advent of the new democratic dispensation generated excitement – anxiety and enthusiasm – from all and sundry. Starting with a Reconstruction and Development Programme, we had to look to Parliament for the removal of all the laws that were the structural impediments to our participation

in the economic development and advancement of our people. As property practitioners, we greatly appreciate various measures that Government is introducing to address this anomaly albeit with great resistance from those who are immensely entrenched. We, therefore, look anxiously at SAIBPP under the leadership of Tshepo Matlala and hope that he will carry the baton that has been passed to him with the necessary vigour and without any fear. The sheer size of the industry means that it will take us longer to make a considerable impact in all aspects of the industry. The property sector codes are now being refined and enacted. We hope they will be of great value in creating an environment that will lead to aggressive transformation. SAIBPP should also look to be as vigilant on vocal as ever. There has been impressive progress from government departments and parastatals in getting the employment

PROPERTY FOCUS l NOVEMBER 2014

OPINION

TRANSFORMATION PROCESS

demographics correct. The areas of concern regarding government and parastatals is ensuring the enforcement of procurement measures that elevate the participation of black people as the main and preferred service providers. The transformation agenda is not an

and let liveâ&#x20AC;?. The barriers came in the form of finance or the now famous stipulations of lack of experience and a suspect track record. Despite the resistance black property practitioners have been able to demonstrate that where there is a will

The cornerstone to entrepreneurship is an ability to focus on one anchor activity and spend as much time on your chosen direction as possible to enhance your chances. event but a journey with its own trials and tribulations. The transformation agenda has started and has to be seen to not only to continue but to grow as well. Given our history it was expected that there will be great resistance from those who have been immensely entrenched and as predicted they were going to create artificial barriers of entry. They did not believe in the dictum of â&#x20AC;&#x153;live

there will always be a way. In the dark days of our struggle we had stalwarts such as the late Walter Sisulu of the ANC owning and managing properties in Alexandra. We salute other stalwarts and torch bearers such as Habakuk Shikwane, Richard Maponya, the new generation of managers in Leslie Herman, Kevin Roman and Molly Gallant, new developers in Mike Nkuna, Siza Ngebulana, the listed sector in Izak Petersen and Sandile

Nomvete, professionals Hatla Ntene and Mpheti Morejele. Many more of our people have proved themselves as being very capable and competent property practitioners. It is, therefore, incumbent upon each and every black person involved in the industry to start their own initiative in redressing the legacy of the past either as employees or as entrepreneurs. Wherever you are be the change you would like to see happening. The opportunities are huge and varied in many facets of the industry and all of them are commercially and financially rewarding. The cornerstone to entrepreneurship is an ability to focus on one anchor activity and spend as much time on your chosen direction as possible to enhance your chances of an early breakeven, survival and prosperity. ď&#x201A;Ł Hosia Malekane is Executive Director of Dijalo Property Group 13

FEATURE

Past presidents look back SAIBPP was founded in 1996 to facilitate the entry of new black players into the property industry as workers in various companies or as property owners. Over the years, the organisation came to be recognised as a true voice of transformation. It has not been an easy journey. On these pages, past presidents of SAIBPP look back on the early days of the organisation, remembering the burning issues they had to deal with and the obstacles they had to overcome. By Phakama Mbonambi

Saul Gumede

Our transformation goal has always been long-term

was the first SAIBPP president. I served two long terms as president because at the time elections were not held annually. The main objective of SAIBPP was, and still is, the advancement of black people in the property industry. During those times in white established firms we had no friends, so to speak. We had no one to share our experiences with. Whenever vacancies opened in the property companies, we often heard that there were no blacks to take those positions. It was like a mantra. That was when the idea of starting an organisation that would find suitable black professionals

to fill those positions and look after their advancement took root. So, a few of us came together – I think were less than 10 – and we started looking for other like-minded professionals in other companies. At that time I worked for Old Mutual Properties. We searched for these professionals in companies such as Sanlam Properties, Southern Life Properties, Liberty Properties, and so on. The main objective was to get people one could talk to, to share one’s experiences with so we could add something meaningful to debates when we were with our white colleagues. We also figured that such an organisation would enrich careers of property practitioners. In those days there was anxiety about window dressing. A lot of black people in the sector were unsure if they got their jobs on merit or because of their skin colour. Also, some black people

were not too keen to align themselves with an entity that would identify them as black. Some people and companies mistakenly viewed us as a union and were, therefore, not keen to be associated with us. Others came to a few of our meetings and left saying we had no direction. We always countered by saying: “If you think there’s no direction, you must come assist us have direction. There is no use in walking away.” Despite a shaky start, we managed to grow SAIBPP. The most difficult aspect was sourcing funding to run the organisation. Our members were mainly employees of property companies. Organisations such as SAIBPP need corporate funding to do meaningful constituent work. When we knocked on doors of some companies, they would ask: “What’s in it for me?” That was often hard to answer. We’d be honest and say to them: “We are here for transformation, we are here for

PROPERTY FOCUS l NOVEMBER 2014

FEATURE Image: Johannes Dreyer

the long haul. We are building a skill base that would assist the country to move forward. It is, therefore, hard to promise one company definite benefits but the positive results would be felt by all.” We invited them to come with us on a journey to transform the country.

strongly believed that we ought to be on our own. We were not going to force companies to employ people. We were also not going to force people to join us. They had to see what we were doing and decide for themselves if they wanted to align with our goals.

While vociferous in our transformation campaign, we were wary to rock the boat. It was a tricky situation. At the end of the day, we were employees of these companies we were seeking help from. We could go only so far in our transformation campaign. We had to be diplomatic to make sure we didn’t violate our condition of employment or alienate our employers.

While I was president our membership base was less than 200. When we started, we limited ourselves to commercial property. Only a few years later did we extend membership to include government and parastatals. Our transformation goal has always been long-term. It has never been about quick wins. Transformation is not something you do overnight if you want to do it properly. Unless if you want to tick boxes. We don’t believe in that. We believe in getting the right skills into the industry. We believe in getting people who will

When we started as SAIBPP, we worked with existing property organisations to show that there was value for our organisation. But we

operate effectively and grow with their companies. We really want to see black people advance in this industry. I’m happy with what has been achieved since our formation. Granted, we haven’t done exceptionally well. But we are still around. We are still preaching transformation. We have always struggled with finances. We are currently active within the Department of Public Works sphere. We made major strides in the drafting of the Property Charter. Taking stock Despite having a few listed black funds, I’m saddened that not much transformation has happened in the past 20 years. The industry is not moving fast enough to embrace change and bring in more black players. The industry is just not keen. Even the 15

FEATURE

few black listings that happened were done on the back of government deals. Otherwise, we wouldn’t have such listed entities. These listings are just a speck on the stock market. It’s not a record I’d be proud of after so many years. We still have a long way to go – both in terms of ownership and services (property management and valuations). Opportunities for the establishment of black property services companies are not forthcoming because owners are not keen to give contracts to black entities. We see existing firms growing bigger and bigger. This is where SAIBPP comes in. The organisation needs to continue being vocal in calling for change in the property industry. Young leaders are needed to take SAIBPP to the next level. We did our bit as founding members. I think we came from a

Andy Tondi

I never once thought of giving up

was the second president and, before then, I had been actively involved in the founding of SAIBPP. Our start was humble. One of the most vivid memories I have of those years was of us, early members, improvising our meeting venues over weekends because we had no office. We often met in the open at Zoo Lake in Parkview, Johannesburg, a convenient venue for all of us. We would also gather at each colleague’s house. Or we would use the offices where we were employed after hours. Despite a lack of

different mindset – that of apartheid. For me to be manager at Old Mutual was an achievement. Fresh views from younger leaders are needed, people who still have a lot to lose if certain things don’t happen. This could fasttrack transformation. While I’m no longer president of SAIBPP, I’m involved in the organisation’s finance committee. Along with fellow colleagues, I’m in the process of helping SAIBPP and the country to professionalise the industry. Our industry is easy to enter because there is no accreditation. We have a protocol agreement with the Institute of Real Estate Management in the US to have proper training for local practitioners. Also, we wish to talk to Sita to see how we could bring that training to the country and align it with Sita procedures. All in all, SAIBPP is

resources, it was heartening to see the commitment from everyone involved. All of us worked full-time and yet we still managed to find time for meetings where we thrashed out the kind of organisation SAIBPP should be. We had a fantastic launch at Eskom Conference Centre in 1996. The event was well attended and we got to meet other black people in the property industry. When we launched we had more than 100 members. We did not have membership subscriptions then. Membership fees came later and started at R50 per annum. This fee went up to R100 after we registered as a Section 21 company and got offices. After forming SAIBPP, we waited a while before announcing its presence to our employers. I worked at Old Mutual Properties at the time. I remember

doing what it can to help the property industry transform. Saul’s journey in the property sector Saul Gumede, CPM® is Group CEO of Dijalo Property Group, a company he co-founded with his long-term colleague Hosia Malekane, CPM® in 1998. He has served articles at Deloitte & Touche before moving to Old Mutual Properties, where he held various positions, including Head of Investment and head of Property Management for the Johannesburg Office. He established Dipula Property Fund in 2005 with Redefine Properties, merged it with Mergence before listing it on the Johannesburg Stock Exchange in 2011.

having a frank discussion with the head of Old Mutual Properties about the need to develop black people in the property industry. I told him about SAIBPP’s crusade. To my surprise, he was supportive. He simply said: “Bring them. Give us names. We’ll develop them.” The company pointed out that it was willing to develop people as long as they were suitably qualified and were capable of being developed. That is why early entrants we found tended to be lawyers, accountants, and engineers – professionals in their own right. Soon, organisations and companies wishing to implement transformation in the property sector would make sure they consulted SAIBPP. We were regarded as a true voice of transformation. We used to tell people that we were transformation activists. We were pretty much involved in what

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FEATURE Image: Johannes Dreyer

we were preaching. We also engaged formally with a few like-minded organisations, particularly parastatals as well as with the national Department of Public Works. They were all willing to help us in our quest to get more black people into the property sector. Many of those who are today in top positions in various property companies used this route to enter the industry. The climate When we formed SAIBPP no one championed the emergence of black players in the property industry. We were lucky to emerge at a time when affirmative action was high on the agenda of many companies. Operationally, we would use our positions at the companies we worked for to host meetings and even use our own money and resources of our companies to host executive committee

meetings and board meetings. It was encouraging to see the idea of SAIBPP coming to fruition. But those early years were tough. Firstly, some black professionals didn’t see the need for SAIBPP and didn’t want to align with us. Secondly, we struggled to get recognition by established business that was dead opposed to transformation. Some saw us as politicising the workplace. Thirdly, funding to run the organisation was scarce. Every time we had to have our annual general meetings we had to source sponsorship. Luckily, the companies we worked for helped to fund us. Regardless of the challenges we persisted with our goal of transforming the property industry. Support for this crusade came from some progressive white people who would pull us aside

and say: “Guys, this is the right thing to do because if you don’t channel your energies towards making this industry transformed and representative of the demographics of the country somewhere down the line we may be forced to do it by legislation.” Also, our push for change was at a manageable pace. The industry was big enough to absorb people as they came. It was also an opportune time to be around because some companies were willing to know exactly what route to take in terms of transformation. Over the years we have forged a fruitful working relationship with the national Department of Public Works. The department is one of the largest employers of black people in the property sector. It is also one of our biggest supporters. Some senior 17

FEATURE

officials at Public Works were also members of SAIBPP. They helped us when we sought international courses to do in order to align ourselves with international organisations to learn best practice. Optimistic I’m happy about the role I played to form SAIBPP. Despite early challenges, I never once thought of giving up. I have always believed that transformation was the right thing to do. The thought of having to explain to future generations why the property industry failed to transform frightened me. To spread knowledge about careers in the property industry, each one of us at board or executive level visited high schools in areas we came from. This was a time when there were no property studies at tertiary institutions, not even a diploma – unlike now. It was interesting to go back to my area in the Vaal (Sharpeville, Sebokeng, Bophelong and Boipatong). People there knew me as a lawyer. When I went to my former high school and spoke about my journey in the property field, the learners were surprised and interested. Other members of SAIBPP leadership went to other townships. These efforts propelled many learners to choose property after matric. A few courses were starting to be offered in some tertiary institutions. We also gave talks at universities. Other black organisations such as the Black Management Forum would invite us to their career expos where we would spread the property gospel. SAIBPP was also heavily involved in the crafting of the Property Charter. I was deployed to represent SAIBPP in the Charter negotiations. Even today, the message of transformation that SAIBPP is pushing 18

is still urgent and necessary. But the environment is more complex now. There are now other black players who represent the interest of property owners. However, the landscape has not changed. We are far from reaching an acceptable level of transformation.

presence is always felt. I’d caution anyone who wishes to make a quick buck in this sector to thread carefully and not get themselves entangled in questionable deals. There have been a few such unsavoury cases before. Practitioners need to bear

You need a younger person who can understand the challenges of younger people. But I’m always there in the background. I’m always available to oﬀer help and mentoring. We are aware that it may not necessarily reflect the demographics. In other words, we may never see the whole property sector being majorityowned by black people because that would require a lot of money. One of the reasons transformation in the property sector is essential is its ability to create jobs. The value chain starts with land acquisition. After construction, buildings need security companies, cleaning companies and so on. Therefore, property has a huge effect on procurement. Property is key to the transformation of our country’s economy. The listed property sector, for example, is doing so well. You can see that a lot of people are interested in investing in property. There is scope to transform the country’s economy using the property industry. I had a great time leading SAIBPP. I’m not sure if I can still do it again. The role I played was relevant at the time. My character was relevant at the time. It may not be so now. Things may have changed. You need a younger person who can understand the challenges of younger people. But I’m always there in the background. I’m always available to offer help and mentoring to younger practitioners. My contribution and influence is always there. My

in mind that it takes a while to reap rewards. Honesty and integrity go a long way. Don’t do anything stupid in the quest for a quick buck. Young people in property need to be mentored by role models, people of integrity, people you can be proud to look up to. Such mentoring is ideal as it gives practitioners an on-the-field experience that can never be obtained from books. All in all, there’s space for more people in property. 

Andy’s journey in the property sector Executive director – TFMC. He graduated with a BProc degree from Wits University in 1998. After spending some time in legal practice, he joined Old Mutual Properties as property administrator, leasing consultant and, later, property investments analyst. Then he moved to Airports Company where he was Group Manager for Property. He also worked as Executive Manager - Portnet (a Transnet division) before becoming Managing Director of the Post Office’s property company. He ran his own property consultancy company before joining TFMC.

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M Oarona Khama

Our greatest challenge was finding our own voice

y tenure as the president of SAIBPP was between 1999 and 2001. My term in office was focused on giving the organisation some grounding and visibility, and articulating its relevance in the industry. Our greatest challenge then was finding our voice in an environment that was not ready to say the least and growing membership so we could be a formidable organisation representative of black aspirations and interests within the property industry. Not everyone understood the emergence and relevance of SAIBPP since there were organisations like the South African Property Owners Association (SAPOA) already in existence. SAIBPP was perceived as exclusive to blacks

and somewhat of a threat to other existing organisations at the time. We had to ensure that our mission was well understood. It was important to make it clear that as much as SAPOA involved a broader audience, there was a gap to specifically deal with the issues that were peculiar to black professionals in a more focused and forceful way. We simply wanted to find a unique voice to speak to specific issues with a degree of authenticity. The issues involved career advancement of black property practitioners, especially in the private sector, raising awareness in black communities of career prospects in the property industry, encouraging the emergence of black entrepreneurs, and

Image: Johannes Dreyer

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engaging government in creating an enabling environment to support black business. We also engaged financial institutions to fund acquisitions and developments by black business. Furthermore, we persuaded the private sector to create career and business opportunities for black property practitioners. SAIBPP became a unified force, and a platform upon which the transformation agenda could be articulated and advanced. In my tenure as SAIBPP president, black-owned property businesses were few and far between. We believe the emergence of SAIBPP began to encourage and embolden the attitudes and efforts of black property practitioners to establish their own entities to pursue business in various aspects of the property value chain, particularly ownership of property. They knew they could rely on SAIBPP being their voice on transformation issues. Through our efforts and persistence, we found a formidable partner in the Department of Public Works to pursue our objectives, which culminated in the formulation of the property charter. Notwithstanding the progress made to date, the work is still cut out for SAIBPP to agitate and ensure that the issues of transformation top the agenda of government and the private sector. It’s hard to pinpoint a single legacy that I can say I left as a president since legacy is a continuous project for a

growing organisation. I’m happy that I was part of the creation of a formidable organisation, from very humble beginnings (no more than 10 members) to where it is now. I’m pleased that we steered the course at a time when the issues of transformation were new and caused a lot of consternation and that we did our part to forge ahead and move the issues forward. So, if one were to speak of impact and legacy, I’m pleased that my tenure laid a base for the continuation of a very important mandate, that of transformation. The existence or emergence of other organisations with common interests as SAIBPP can only serve to reinforce our message. If anything, the more people speak out about these matters the more movement and greater traction we’ll begin to see. As for the future, the ground work has been laid and the environment is fertile for bigger gains. It is now for SAIBPP to forge ahead with an even stronger sense of resolve and purpose. Transformation is not a linear event, it requires effort, courage and resolve to stay on course without which it’s easy for this to recede to the background and it’s business as usual. New energy is required all the time to remain relevant and focused. The biggest impact that SAIBPP can make is to be the consistent powerful force and conscience for transformation both in the public and private sectors. We owe this not only to ourselves but also to future generations. 

Oarona Khama’s journey in the property industry Today Oarona Khama runs her own property consultancy company Meedi Properties, focusing on property investment strategy and development management services. The company has been in existence for more than five years and continues to grow by securing advisory mandates not only in South Africa but from other parts of Africa as well. Oarona’s career in property started in 1994 at JHI Isaacs as a trainee in various functions in the company, including property management, asset management and leasing. In 1996, she moved to Airports Company South Africa (ACSA) in a position of retail manager and property development manager. In 2000, she joined RMB Properties (now Eris Properties) as a development manager and that is where her skills and enterprising spirit were honed, laying a foundation for her future ventures.

FEATURE Image: Johannes Dreyer

Caswell Rampheri

SAIBPP must continue its advocacy role

was president between 2004 and 2007. I served two terms and a bit. When I took over the reins, SAIBPP was in a lull due to organisational and financial constraints. People like Saul Gumede sacrificed a lot to keep SAIBPP alive. My directors and I basically had to rebuild SAIBPP. We had to re-establish the structures, drum up memberships and raise funding. By and large, we succeeded. We managed to re-open the SAIBPP office and employ personnel to run the organisation. We had our first conference after a long time of not having held such an event, and it was well sponsored. Successive conferences followed. We enhanced our communication. We re-established the SAIBPP brand. We had a website. A huge following resulted. We commanded respect of established business. Structures were in place and there was even surplus money in our coffers to run the organisation. In the industry our presence was felt. We played a pivotal role in the drafting of the Property Charter. We had our former president Andy Tondi and other colleagues working hard on behalf of SAIBPP in the Charter negotiations.

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At the time it wasn’t easy to lead SAIBPP. There was a lot of resistance from established business. Some people asked why we didn’t form a chapter and be housed within South African Property Owners Association (SAPOA). Essentially, these voices were saying we should consider being a transformation desk within SAPOA. We refused to do that because we were wary that transformation would not become a priority. At the core of SAIBPP is the transformation of the property industry. I’m glad there have been significant gains in the sector. SAIBPP started out like the Black Management Forum. It was about getting black people within positions of influence within established property companies. Then the organisation moved towards broader participation, including supporting black practitioners to start their own businesses. So, SAIBPP shifted focus from employment equity to enterprise development. This meant that an emerging black company could provide a service to an established institution rather than being absorbed within the institution. Later on, the focus was on getting black practitioners who will be players in their own right within the property sector. While more can still be done, there have been some gains if you look at listed black funds such as Rebosis, Dipula and Delta. We need to celebrate these successes and hope that they have paved there way for other successes. It’s a sign that black-owned companies can operate within the space in their own right and compete on an equal footing. Yes, they are not as big as Growthpoint or Redefine but there is no reason for them not to be that big someday. Regression When I was president, we fought hard to get established business to

develop in townships. That was the rallying cry. But now I’m not so sure if that was good call, without an agreed transformational framework. This framework should include black ownership and a programme not to displace small businesses. As it happens, established businesses are mopping up most of the opportunities. The core of real estate is not ideas but access to capital. We need to find creative ways to overcome this constraint. Perhaps the calls to have a “people’s bank” to finance huge property transactions of emerging black business are valid. That will help to redress skewed ownership patterns. If you look at websites of most established property companies you can see that there has been a regression in terms of transformation. For the most past the Charter are without teeth and companies have gone back to their comfort zones. It is disappointing. This regression applies to all sectors of the South African economy. In the past companies were committed to explore the idea of transformation. Companies felt the pressure to do the right thing. Most transformation initiatives were driven by fear of penalties if there was no change. Things have changed now. It has been proven that if you don’t transform nothing will happen to you. In fact, you might even get the fattest government tender. It wasn’t easy being president of SAIBPP while holding on to a full-time job. I worked for Liberty Properties then. Like all the others before and after me, I had to juggle these two roles. At first, it was fine but towards the end of my reign, I just couldn’t do it anymore. My full-time job became too demanding. But it was never the intention to have a status quo like that. We once explored the idea of SAIBPP forming an investment arm that would

benefit from empowerment entities. The idea was that SAIBPP would be thought of as a BEE empowerment partner in these deals. That would have been true empowerment since it would not have empowered individuals. Over time, that money, in the form of dividends, would have helped to get full-time staff and get a CEO to help with the day-to-day running of the organisation and ensure that SAIBPP grows in size and stature. Way forward Regardless of challenges, SAIBPP must continue its advocacy role. At one stage SAIBPP was very close to government in terms of influencing policy. That should continue. The brand needs to be prominent on TV and print media. Now and then, every three years or so, SAIBPP needs to critique itself in order to continue being effective. It also needs to ask its counterparts and members about what could be done differently. Through this feedback the organisation can continue to grow and be relevant. 

Caswell Rampheri’s journey in the property industry Caswell Rampheri is the founder and Chief Executive Officer of Buna Group, a property development, infrastructure and investment group with operations in South Africa and selected markets in other African countries. Before that he was Chief Operating Officer for Liberty Properties, where he ran management and development arms of the business. He has also worked for distinguished companies that include Investec Properties, Old Mutual Properties, Peermont Global and Pareto Limited.

FEATURE Image: Johannes Dreyer

Nyameka Madikizela

Innovative quantum leaps are needed

hen I joined the SAIBPP board, the Property Charter negotiations were under way and they concluded in 2006. As the newly elected SAIBPP president in 2007, I was looking to elevate SAIBPP beyond the Charter, and have a major transformative impact and open opportunities for many black property practitioners.

It wasn’t easy to champion the SAIBPP message. We were calling for change in an industry that had a few significant players, with capital-intensiveness a barrier of entry that very few black property practitioners could go beyond. As property practitioners, our appetite as investors was realised as on-lookers where we had been employees of companies such as Old Mutual, Sanlam and Liberty. We were frustrated by the fact that the industry had not attracted significant black participants despite a new democratic dispensation in the country. During my time as president, we wanted SAIBPP to be more than just a noise maker, but a legitimate voice of transformation. The ANC government supported transformation by changing the lease policy, linking the number of years in leases to a company’s BEE shareholding. Such a decision

would empower new entrants in the sector, leveraging equity partnership negotiations, in favour of aspirant black owners or investors. When the policy was institutionalised and made public, we felt that it would encourage the existing players to attract investors beyond the 25% agreed upon in the Property Charter and would empower black partners to have a role beyond that of opening doors to government networks. By developing a coherent plan that would get more black professionals into the industry, we felt it was important to regularise skills in the industry. We began by exploring strategies of formalising certification from post matric, creating interest for high school students, and so on to ensure that the industry is not a preserve for a select few. We dreamt of an institution that could offer such certification – for

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Despite these challenges, there’s a future in property. It’s just a question of breaking the small hurdles that are there, taking away the little trappings. brokers, asset managers, property managers, property owners, and trustees. We wanted all players, including emerging players, to know what they were getting themselves into when they got into deals. We wanted to do this with the South African Property Owners Association. Pity nothing came of it even though we clearly had a common objective. Frustration While still president and after I stepped down, I got to understand the many factors that frustrate efforts to transform our industry. Corruption between the corruptor and corrupted at the Department of Public Works (DPW) is a problem. Sadly, this is still reality. Fortunately, the department is doing a lot to uproot these individuals. Whether they succeed or not is another story. Another frustration came from how banks still deal with emerging property practitioners. You might have a 10-year lease from government, but to the banks you need a good jockey for the deal to be good. When overly trusting the jockey instead of scrutinising the viability of the deal at hand, banks tend to make bad deals. An example would be a deal involving the purchase of a property with rentals that are much higher than market value. This smells of corruption, and yet banks turn a blind eye and approve these deals as well. The processes behind the leasing policy created yet another stumbling block. You can’t have a lease in place until you have signed a deed of sale. Sellers

(typically previously advantaged) then insist you show them the money before signing the deed of sale. Without the lease and deed of sale, you cannot raise funding. The DPW, while supportive, has always insisted that the property needs to be in your name before it can give you a10-year lease. It’s a catch-22 situation. So you would have a bank willing to fund the transaction, a seller who refuses to sign a sale agreement before a lease is in place. But the property cannot be in your name because you are struggling to raise funding. Meanwhile, the seller is growing impatient. That’s how, as a new entrant in the industry, you would go around in circles, ultimately failing. It is like a vicious cycle of poverty, is it not? Finally, in the valuation of the government-leased properties, often the property or portfolio that the property practitioner is purchasing is old and has not been properly maintained. This is because the previously advantaged seller is running a year-onyear lease that escalates astronomically – sometimes between 12% and 15% since the property owner is optimising the returns on the assets. It’s not easy for government departments to change properties. The high rentals give a false value of the building. So, the sale price is over-the-top. Unless the new participants understand property valuation, they would need to sell quickly. As a new entrant, you almost have to make space for a loss-making situation. It’s almost like a cyclical power struggle between the DPW, the banks and the sellers. That’s

why the industry has not transformed much. Innovative thinking Despite these challenges, there’s a future in property. It’s just a question of breaking the small hurdles that are there, taking away the little trappings. There need to be some innovative quantum leaps in terms of setting up products that would solve equity challenges to allow entrants with good ideas, and with enough drive to make it for the next property deal. Perhaps the long leases still need to be kept in place. But the new entrants and existing property practitioner need to have a strong work ethic. They also need to believe in themselves and move beyond just BEE victimhood. They need to take innovative strides and be fearless about changing things, even at a price, to get ahead. 

Nyameka Madikizela’s career in property industry Nyameka Madikizela is currently Executive Manager of Transnet Freight Rail where she oversees the regional integration of rail networks to enable regional development. She was the Chief Operating Officer and shareholder in Calulo Property Fund Limited and has run her own company iMfihlakalo Asset Management (Pty) Limited. She has a burning desire to help break the cycle of poverty in the country and beyond our borders.

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Kgaogelo Mamabolo

We must celebrate every achievement, big or small I took over the presidency between 2008 and 2011 after Nyameka Madikizela. I joined the SAIBPP board during Caswell Rampheri’s presidency and was involved in the review and change of the SAIBPP strategy in 2006. We were aware that things were starting to change in the property sector since SAIBPP’s formation a decade earlier. A lot of black new players were entering the industry, the Property Charter process was in place and had to take into consideration previously disadvantaged investment areas beyond traditional investment nodes. We started to understand the changes that were happening and we began to be more focused in tracking transformation within the industry to be in line with industry trends. We continued this strategy under my leadership, but our operation was hampered by a lack of adequate funds, a perennial problem since SAIBPP’s formation, a similar problem for organisations with similar goals. We juggled our day jobs with SAIBPP’s duties. It helped to have support from organisations that employed us; they understood the demands of leading SAIBPP. However, that was not enough to run the organisation, to turn it into a formidable force. We even had to ask some founding members to come help run the interim board when our numbers were thin. People such as Saul Gumede and Andy Tondi willingly took up the roles to complement the board. 26

I was touched by their dedication and helpfulness. It made me appreciate even more the role we were playing – that of being ambassadors of change. They definitely did not have to take up this responsibility as they had already put in so much time and sweat to establish and run SAIBPP in the early days. But there they were happy to get their hands dirty once more. Key achievements Some significant achievements happened during my tenure as president. First, we created a risk and audit committee. The establishment of this committee was critical. It was important to show that we were professionally accountable to our members in terms of taking care of their membership fees. It was all a part of stabilising the governance of the organisation. Our overall governance is now properly managed and reviewed. My deputy, Thomas Matlala, chaired the committee. At that time we also started regional operations that helped SAIBPP to be more inclusive. Under Madikizela, the Eastern Cape Regional Chapter was established. With the help of committed individuals under the leadership of Sigi Naidoo, we established the Western Cape Regional Chapter. We also initiated discussions towards going to KwaZulu-Natal and that subsequently happened. Other achievements during my presidency included SAIBPP playing a huge role in assisting towards gazetting the property charter, together with the other property charter signatories. The involvement with the charter brought even more commitment within SAIBPP. In addition, we were also part of a grouping that supported the founding in 2011of the Black Business Council, an overarching body

representing the interests of black business and organisations. Also, we managed to retain some critical relationships with corporates and our members. We continued with discussion forums that allowed for robust discussions. To keep members and stakeholders informed about our activities and developments in the sector, we initiated the SAIBPP magazine as an additional communication tool. We also roped in new members whom we introduced to the system. Right now, we have a completely new board consisting of professionals from different sectors, which ensures that SAIBPP carries out its duties with a new perspective while, at the same time, benefiting from the expertise of older members within the organisation. That is the beauty of SAIBPP – it profiles people who otherwise would not be profiled in other organisations because they are small firms that are yet to make their mark in their field. Lastly, we continued to work closely with the Department of Public Works due to its direct impact on the property industry. We also tried to collaborate with other government departments – at national, provincial and local level – and state-owned enterprises, but this is a task to be continued by the current and future board in order to get full government stakeholder participation. Milestones During my presidency, I was thrilled to see black companies getting into listed portfolios – for example, Rebosis, Dipula and Delta to name of the few we have today. That was a milestone in the property industry. Sadly, other black property practitioners still struggle to access finance in order to emulate what these pioneering funds. A lack

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of capital is an area that still needs focus. On the whole, SAIBPP’s message is still relevant today. We are not a transformed industry. I’d like to believe that a lot of companies want to transform. At the same time some companies don’t make transformation a priority. That’s an unfortunate position. We all need to do the right thing. Transformation is not about entitlement. Rather, it’s about ensuring fair distribution of skills, of ensuring that people with potential can grow and prosper in the property industry. During my reign there was a huge issue of irregular landlord behaviour around leases with government departments that affected the ability of government’s assistance to transformation. The financial sector became jittery around

the soundness of sovereign leases and there was confusion surrounding Department of Public Works’ position on transformation. Some people felt that as SAIBPP we were not speaking hard enough on behalf of landlords. This was a misunderstanding. We didn’t have enough information and we didn’t

landlord. We have members who are landlords and we cannot condone if any of them using privileged access to stakeholders such as government to pursue their own interests as we would be seen as being supportive of such practices.

Transformation is not about entitlement. Rather, it’s about ensuring fair distribution of skills, of ensuring that people with potential can grow and prosper in the property industry. want to make a wrong decision. So, we played it safe and issued statements that some thought were mild. Yes, we want to grow the number of black landlords and we support initiatives that will create businesses in the industry but we can’t speak on behalf of a single

I remember the strain of working fulltime and still presiding over SAIBPP’s affairs. It required serious commitment. Fortunately, I didn’t have children and husband at the time, which would have placed a greater demand on my time, and I was able to focus on very 27

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challenging tasks. I worked hard – at night and over weekends. I tried not to bite more than I could chew though. I got support from other board members and I also used my colleagues’ strengths well. It was like any other juggling act. But it was critical for me that the deliverables of my full-time job didn’t suffer. Gender matters While leading SAIBPP as a woman I was keenly aware of the gender aspect of transformation. But it made more sense to first focus on racial transformation and to stabilise the organisation. If you try to do too many things at once something is bound to fail. We worked closely with women groupings, some of which were members of SAIBPP and they focused on gender matters. When I was president, there were years there were only two female members in a board of eight members. After I stepped down as SAIBPP president, I became more involved in other women organisations at member level such as the Women’s Property Network. I like getting involved in organistions that champion causes that make a difference. I believe in giving back and that you have to participate if you want to see the difference in society. You have to be out there. Sometimes people will not like what you say. But if it’s something you believe in, if it’s not an attack on an individual but something that benefits the industry, you must stick to your guns. There are people I’ve have had disagreements with but today I believe they respect me just as I respect their views and will try to make our common goals achievable. As we look back on the journey travelled as SAIBPP, we must celebrate every achievement, big or 28

small, that we have witnessed. I hope that black businesses that have since emerged in the property field will, as a form of giving back, encourage the emergence of other successful black businesses. Given our past, it’s imperative that people coming from disadvantaged backgrounds are given opportunities to succeed. As a country, I wish we could boost economic growth so that transformation efforts can go ahead without any glitches. Through transformation we can have professionals who are qualified who will add value to their companies. Even though change is happening slowly, I’m optimistic that transformation can be achieved in the property industry. When I stepped down as president, SAIBPP enjoyed the support from all past presidents, past board members and committee members. They all help in the background as new members establish themselves within the organisation. The future SAIBPP is going to be around for a long time. We still have a long way to go to transform our industry. We need innovative ways of doing so. We need to look at what didn’t work and we’ll look at improving. Luckily, we still have energy to get established business to embrace transformation. We need to work with the property charter more in this regard. We need to get our financial house in order and get a CEO who can champion the SAIBPP agenda on behalf of members to allow the president and the board to focus on strategic matters. The CEO would also ensure that the governance of the organisation is on the right track. I wish future board members luck in terms of continuing championing transformation and helping people to be competent within the industry.

I’m pleased that SAIBPP sponsors students to study property at university. It’s a great and necessary initiative. It will help towards having property practitioners who are confident about who they are and what they know. As SAIBPP embarks on this journey with young people we, I hope we established members could take time to mentor them so they don’t get lost in the system. While leading SAIBPP was tough and sometimes I felt like giving up, it was also an opportunity to tap into my potential as a leader, to gain wisdom and learn from other people whom I have come to respect today. I am very proud and humbled by SAIBPP members who gave me the opportunity to head the organisation. I feel very special that I played a role towards transforming the industry for my peers, my future stars and myself.  Kgaogelo’s journey in the property industry Kgaogelo Mamabolo joined the Liberty Group in 2007 and is now with STANLIB’s Direct Property Investments Franchise. She is currently asset manager for the STANLIB Africa Direct Property Development Fund since January 2014. She previously asset managed for two years the Liberty Direct Portfolio, which included Sandton City, Nelson Mandela Square and Promenade Shopping Centre, the hotel portfolio and selected offices. Kgaogelo joined the Liberty Group from the Investment Property Databank (SA), where she was Head of Research between 2006 and 2007, and began her career in 2011 in the property industry as a Researcher and Property economist with Viruly Consulting.

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Investing in good yielding properties Magakabye Property Services is a property investment company. The companyâ&#x20AC;&#x2122;s goal and objective is to invest in good yielding properties, preferably single tenanted buildings. Magakabye Property Services (Pty) Ltd was established in 2005 by seasoned property professionals. This black-owned and managed investment company has grown extremely well. The market value of their investment property is R 102 million in 2014. Dijalo Property Management (Pty) Ltd, a subsidiary of Dijalo Property Services, was appointed as property managers and to also provide financial services for the company. Magakabye Property Service (Pty) Ltd wishes SAIBPP a successful convention and hope the property industry at large will benefit from the deliberations.

Magakabye Property Service (Pty) Ltd Address: Block B, Dunkeld Park, 6 North Road, Dunkeld West, Johannesburg, 2196. PO BOX 2691, Johannesburg, 2000 Tel: +27 11 325 7408 Fax: +27 11 325 2030 Email: info@dijalo.co.za 29

MAIN PROFILE Image: Johannes Dreyer

Time for action By Phakama Mbonambi

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he era of government crafting wonderful policies promising to transform the property sector in order to facilitate the entry of more black players and women and then doing very little to implement those policies is over. It’s time to act. Otherwise the property industry will continue to fail to reflect the country’s demographics 20 years into democracy and beyond. This is the strong message Thomas Matlala, SAIBPP president, is taking to the SAIBPP’s one-day conference at Turbine Hall, Newtown, Johannesburg, on November 6. It’s a sentiment shared by all within his organisation and black property professionals and owners. The conference’s theme is “property transformation 20 years after democracy”. Matlala speaks from experience, having witnessed efforts to transform the property industry in the past 20 years. Those efforts have had mild results. While a Property Charter has been in place since 2007, binding property industry players to facilitate transformation, most black practitioners bemoan the slow pace of transformation in general in the real estate industry, which includes commercial and residential, estimated to be worth more than R4.9-trillion. SAIBPP, a member organisation formed in 1996 to represent the aspirations of black property practitioners and owners, puts the blame squarely on

government’s door. The organisation believes that government, as represented by the Department of Public Works, has the immense power to effect change - if only policies could be implemented properly and a broader vision of job creation and empowerment of those previously excluded to participate in property industry is adhered to. “South Africa has the best empowerment policies in the world. All it simply needs to do is master implementation and enforcement,” says Matlala. SAIBPP’s mission to change the face of an industry that traditionally had a few significant black players. Historically, black people were prohibited from owning commercial property and could lease residential property only

Even though the country had a new political dispensation and empowerment was uppermost in government’s agenda, the property industry remained largely untransformed. Why was that? “First of all, property needs deep pockets. Secondly, the barrier to entry is high,” says Matlala, who was elected president in 2011, replacing Kgaogelo Mamabolo. Matlala says the push for change is made up of two objectives: “The first objective is to have greater black representation in property businesses,” he says. “The second one is to create black-owned businesses in the property industry. If we leave current property players as they are and only pine for black representation there is no guarantee that those representing the

South Africa has the best empowerment policies in the world. All it simply needs to do is master implementation and enforcement. in townships and not in formerly white suburbs. Property ownership is universally seen as a main enabler of wealth creation for nations. The exclusion of black people in owning property has resulted in a massive wealth gap in South Africa. The country has the highest Gini coefficient rate in the world with property and land ownership heavily skewed as a result of apartheid policy of excluding black people from fully participating in the economy.

aspirations of black players within these companies will be conscientised enough to realise the need for these companies to change. We have seen it in the past. People would buy stakes in property companies, sit on the board and nothing would change.” Government comes into the picture of transforming the property sector because it is “the biggest landlord and tenant”. It has stock worth hundreds of millions of rands that it can either 31

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sell to black property practitioners or lease buildings owned by black-owned companies. At the moment government offers three-year leases, with a 5% escalation per annum, to property companies. In 2006, heeding calls for transformation by SAIBPP, the Department of Public Works (DPW) took a bold step of entering into 10-year lease agreements with empowered companies. It was a boon for emerging black property practitioners, just what everyone had long been calling for. “Within three years about R13bn worth of black property companies were created,” says Matlala. Then came the much-published Roux Shabangu saga and coupled with DPW’s maladministration and corruption by both department’s

leases from 10 years to three. Instantly, transformation gains were reversed and confusion was sowed in the industry. Matlala feels reducing the lease term was erroneous. “Yes, it was necessary to deal with corruption, but it must be remembered that it was government’s fault; it implemented its own policy badly,” says Matlala. “Just because there were problems with one deal there was no need to scrap a policy that was otherwise working fine. You don’t cut your hand just because you have a mosquito bite on your finger. For Matlala government could play a meaningful role if the Minister of Public Works could receive informed advice about the fundamentals of the property industry. “The problem is when a person advising the minister doesn’t understand property issues well. As they say, little knowledge is

Economies that have grown from the kind of past we have included government assistance. officials and some unscrupulous private property owners and the wheels came off. To bolster its governance and avoid the repeat of mistakes, the DPW, following a Treasury’s directive, cut 32

very dangerous,” says Matlala. He cites the current three-year leases, with their 5% yearly escalation, as a typical example of faulty reasoning. “With inflation sitting at 6%, this arrangement

means that whoever owns that property is losing money every year. It means the owner is financing government to be in that property since someone has to pay that extra 1%. In simple terms, the current policy means as a landlord to government your rental escalation at 5% is below inflation. If you are an empowerment player, you won’t be able to sustain that because you don’t have the money. You will have to retrench people because you are financing government to be in your properties. Only someone who doesn’t understand property could have given that kind of advice. In general, I don’t think government wishes to ensure that empowerment companies fail.” Matlala says any erroneous advice at departmental level is costly to the broader society, not just black companies that are immediately affected: “If as a property practitioner you make losses, it means you won’t be able to pay tax as well as you should, meaning less money to the South African Revenue Service and less money for government to build schools, hospitals and roads. That is why the skills set of people advising the minister is very important. Mistakes affect the whole value chain of the country’s economy.”

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MAIN PROFILE

Regardless of the instances of bumpy implementation, SAIBPP firmly believes in working with government to change the landscape of the property industry. Matlala sees nothing wrong with SAIBPP relying so much on government support to transform the sector. “Economies that have grown from the kind of past we have included government assistance. The Chinese government sets the economic agenda. Between 1970 and 1990, it turned an agrarian economy into a highly industrialised one, and is now the second biggest economy in the world. Similar government interventions have happened in Malaysia and Brazil,” says Matlala. “We had the same situation here in South Africa when the Nationalist government drove measures to economically uplift the poor Afrikaners. Some of the big companies today started out as suppliers to government and had exclusive contracts with government. As a result, the Afrikaners’ economic wellbeing was transformed and they became part of the mainstream economy. There’s no reason we can’t do the same for emerging black players.” In practical terms, though, how can government flex its muscle to effect transformation in the property industry?

“Growthpoint, the biggest listed property company, has R80bn worth of properties. Government, on the other hand, has R450bn worth of properties, about six times the size of Growthpoint. Six major black companies can be created from these properties. That just shows how big the market is. We just need to think outside the box,” says Matlala. Government intervention could also create a push for established corporates to take transformation more seriously. “Once government intervenes, your typical CEO or chairman and the board will be able to realise that they have two imperatives – make money and comply with the law,” says Matlala.

companies are South African-owned and this will help with the country’s balance of payment. Secondly, it means the skills remain in the country. Thirdly, we can be able to employ more people. So, black economic empowerment helps to create a stable economy and make the country work. Black economic empowerment is crucial; it is not a nice thing to have. It’s a must have.” In its advocacy for transformation, SAIBPP benefits from working closely with other like-minded black groupings. “We are the founding members of the Black Business Council. We are one of the six office bearers of the Council,” says Matlala.

Once government intervenes, your typical CEO or chairman and the board will be able to realise that they have two imperatives – make money and comply with the law. He points out that transformation is linked to black economic empowerment, which, in turn, benefits the entire economy of the country. “The first benefit of black economic empowerment is that the money will remain in the country because the

“Synergies with organisations such as the Black Management Forum and the Black Lawyers Association assist us to get a better understanding and a broader view of the issues in the country.” 33

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Thomas’s journey in the property industry When not running SAIBPP, Thomas Matlala is Managing Director of MatReal Properties, a property investment company that develops properties in Mozambique and Kenya. Thomas’s career started at JHI in property management and later in brokerage. He then became the assistant regional manager for Transnet Properties in charge of four provinces, Gauteng North, Mpumalanga, Limpopo and North West. He was later part of a team that initiated the N3 Toll Road Company and sat on its board. This is the company that built the N3 toll road from Johannesburg to KwaZulu-Natal. He founded MatReal Property Services, which, together with partners, put together a R350m property portfolio. Dipula Property Fund, a JSE-listed company, now owns the portfolio. MatReal is the sole owner of Indite Africa Property Fund, a fund investing in highyielding assets on the continent. Matlala serves as the CEO of Indite Asset Management company, which performs asset management services to Indite Africa Property Fund. MatReal develop properties across the continent, particularly in Mozambique and Kenya. Asked why MatReal focused on these African markets, he says: “The rest of the continent is where South Africa was in 1992. So, if South Africa grew from R2bn or so to R400bn today in the listed sector alone, it already tells you what kind of growth we are already anticipating in the next 20 years on the continent.”

He says government’s much-publicised idea of creating 100 industrialists in the next few years to radically transform the economy dovetails with SAIBPP’s standpoint on the need to create many black-owned companies. “If government’s plan were to extend to the property sector, SAIBPP would be more than willing to provide advice to government on how bigger black-led property companies could be created”, says Matlala. “Our tax base will increase. More jobs would be created. Government can collect more revenue to fund infrastructure development projects. That is why we say government simply needs to implement. No more policy discussions. The only discussion SAIBPP would like to be engaged in is on how the policies we have had in the past 20 years are going to be implemented in the next 20 years. The National Development Plan, for example, is an implementation document.” How does he see the prospects of transformation in the property industry in the coming years and SAIBPP’s role? “We promise our members that in the next five years we’ll push government to implement its own policies. It’s time for action,” says Matlala. While a lot is yet to be done, Matlala is pleased with some key milestones in the property industry over the past 20 years. “When we started, there were probably less than 10 of us. Now when you go to meetings, you get a room full of people. So we have been able to get our people into the industry,” he says. “Secondly, some of our members fly high in the corporate world where they should have been all along had the market been open to them at the time. Thirdly, crafting the Property Charter, a second Charter after the mining one, and seeing that succeeding after all these years. Fourthly, being able to finance students

at university who will be the next leaders in the industry and hopefully members of SAIBPP. Lastly, it has also been gratifying to see the emergence of black-owned property companies that have since grown bigger. You have some high-powered executives who in the early days were executive members of SAIBPP. There is no property company that has not been touched by SAIBPP one way or the other. That fills us with pride.” As SAIBPP president, Matlala’s abilities to lead from the front, to amplify the rallying cry of transformation, are in no doubt. His deputy at SAIBPP, Nkuli Bogopa, describes him as having an “actionorientated leadership”, someone with “great networks and this assists in maintaining the high profile of the organisation. He is open to ideas and input from the board.” Felicia Sao, another SAIBPP board member, says Matlala “is very detail-orientated” and is always willing to provide leadership to a board consisting largely of young members. Oarona Khama, a property practitioner and former president of SAIBPP, remembers Matlala’s early days in the property industry. In 1994, the two met as trainees at JHI Properties (both studied at Wits University). “At JHI, we sat side by side as we learned about property management and property brooking (selling and renting commercial property). Together, we walked the streets of Johannesburg identifying opportunities for letting. Thomas’s passion for deal making was unmistakable. I knew then that he was destined for great things,” says Khama. “Thomas has great people’s skills, a requisite for a leader and he continues to steer SAIBPP in the right direction, especially on issues of transformation.” 

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FEATURE

The highs and lows of the past 20 years Meago Asset Management* director Thabo Ramushu takes Thabang Mokopanele through listed propertyâ&#x20AC;&#x2122;s 20-year journey in which black economic empowerment became a rallying cry. Ramushu offers his insights about the intricacies of listed property funds and who owns the R250bn of the sectorâ&#x20AC;&#x2122;s market capitalisation.

Thabang Mokopanele (TM): Please take me through the changes and growth you have witnessed in the past 20 years in the property sector. Thabo Ramushu (TR): In the early 2000s the listed property sector was in its infancy. There was limited investor interest and companies were characterised by poor management and inappropriate governance structures, largely a result of external management companies (Manco) with perceived conflicts of interest. Essentially, the company had a differing set of stakeholders: promoters who owned the Manco and managed the fund and the public, who were participants at the Johannesburg Stock Exchange (JSE) level. There was

always perceived conflict of interest as promoters were predominantly incentivised by charging a fee at the enterprise level and it was in their interests to grow the fund without focusing on extracting (in)efficiencies? as the former was for the benefit of the Manco. Life companies and institutional investors also viewed the listed property sector as a dumping ground for undesirable properties and would also have chosen to have stakes in the Manco rather than owning properties directly. In addition, the differing legal structuring available for Property Unit Trust (PUT) and Loan Stock (PLS), governed by differing regulatory bodies, the Financial Services Board and the JSE respectively, created

considerable difficulty in enabling corporate action between these vehicles. PUT made it impossible to effect corporate action without the amendment of the trust, which effectively governed the external management company. These perceptions have fundamentally changed over the past few years, particularly the introduction of Real Estate Investment Trust (REITS), which defines a universal standard of recording within which far more consistency exists across listed property companies. With the introduction of REITS, the previous legal structure of PUT and PLS, governed by the Financial Services Board and the JSE respectively has been amended into REITS. The introduction of REITS 35

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The market capitalisation of the listed property has grown from R14bn in 2002 to more than R250bn. enables consolidation because most PUT internalised the management companies, thereby aligning shareholders interest and are now governed through the JSE. These changes have resulted in marked growth within the sector, the market capitalisation of the listed property has grown from R14bn in 2002 to more than R250bn. The growth in the sector is further complemented through new listing, acquisitions and extensions and consolidation that resulted in improved liquidity and re-rating. Considerably more vendors are now prepared to look at the listed environment as a means to improve access to the capital markets, and foreign interest in the sector has grown. The sector has also evolved to include property companies with dual listings from other exchanges. These companies have presence in Australia and in Eastern and Western Europe. TM: What has been the driving force behind real estate growth in the past 20 years? TR: The total return of listed property has only been negative in the last 20 years in 2008 as a result of the global financial crisis and massive 36

capital loss. The income component has, however, remained positive throughout this period. The income component of listed property is defensive and fairly predictable because it is underpinned by leases that average between three and five years and has built-in escalations which are typically above inflation. There is also a spread in the risk because the buildings are multi-tenanted and no concentration to any one tenant. Thus short-term changes in economic fundamentals have a limited impact on listed property when compared to general equities.

â&#x20AC;˘

TM: What is the link between real estate and the larger economic growth?

TM: What has been the trend in terms of emerging new black players and substantial property deals involving black companies?

TR: There is a positive link between the gross domestic product and occupation of real estate. Growth in economic activity affects real estate in the following ways: â&#x20AC;˘ The current commercial vacant space is absorbed by increased demand for services and rentals increase for existing space. â&#x20AC;˘ The increased rentals make it viable for landlords to develop additional space because of increased demand for space and new projects are feasible at higher rentals.

The new developments increase construction activity, which create jobs and demand for building materials.

TM: Who are the owners of real estate in South Africa? TR: Commercial real estate is owned directly by institutional investors such as listed property and public companies, pension funds, life companies and private investors. Indirectly specialist listed property unit trusts and insurance products are wrapped with property.

TR: The listed property sector has seen the entry of several property funds managed by black professionals and entrepreneurs. Rebosis, Delta, Ascension and Dipula all have fairly sizeable portfolios, not only comprising government-tenanted buildings, but are well diversified across other subsectors such as retail and, to a lesser extent, industrial. We have also seen several unlisted black property owners introduce their portfolios into listed companies, such as Nthwese Properties

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FEATURE

The listed property sector has seen the entry of several property funds managed by black professionals and entrepreneurs â&#x20AC;&#x201C; Rebosis, Delta, Ascension and Dipula. selling R1bn worth of properties to Rebosis, meaning that properties changed hands among black players. In addition, we have seen Encha Properties introduce their portfolio into Vukile as part of a BEE deal. On the listed side Indite Property Fund, a black-owned property company, signed a memorandum of agreement to set up a black-owned Manco with Arrowhead Properties. The idea was that Indite Property Fund would inject their government-owned properties together with Arrowhead into a black-owned Manco according to the DPW.

GRT Shareholding 1 GEPF 2 Southern Palace Properties (Pty)Ltd 3 State street bank trust 4 Quickleap Investments 429 (Pty) Ltd 5 Investec Property Fund 6 Stanlib Property Income Fund 7 SBSA ITF Prudencial Funds 8 Investment Solutions Property Fund 9 SBSA ITF Old Mutual Funds 10 Citibank (New York)

TM: Listed property companies have pretty complex ownership structures that include institutional investors. Can you take us through an ownership structure of, say, SAâ&#x20AC;&#x2122;s largest property group Growthpoint Properties in terms of its shareholding.

TM: In terms of black players, are we seeing more black players entering the market and playing a meaningful role?

TR: The table below shows the top 10 shareholders of Growthpoint by value. The shareholding is directly by pension funds such as the Government Employees Pension Fund, indirectly by retail investors through listed property unit trust such as Investec Property Fund, foreign shareholders like State Street Bank and BEE shareholders. The more liquid property funds tend to have a larger shareholder base.

9,70% 7,67% 6,20% 3,38% 2,52% 2,33% 2,13% 1,93% 1,83% 1,73%

TR: After the introduction of Rebosis, Delta, Ascension and Dipula, we have seen a slowdown in the introduction of black players into the market. What are the reasons behind that? This may also be due to the perceived uncertainty linked to governmenttenanted building within the investment community, whereby many of these counters now trade at a discount to peers within the sector. These players, however, are all pioneers in the sector and should be supported, as they have demonstrated the will and capability to

build sizeable, well-diversified property portfolios, and provide attractive income returns with limited risk. TM: We have three prominent players in the listed property market Delta Property Fund CEO Sandile Nomvete, Rebosis CEO Sisa Ngebulana and Dipula CEO Izak Petersen. What was the reaction of the market to these new black entrants and their performance? TR: The reaction by the market for listed black property companies has been negative over the past two years months, with the index returning a positive capital return of 9.18%. Rebosis returned a negative -0.78%, Delta -8.81% and Dipula with a dual structure returned -14.10% for Dipula A and -10.59% for Dipula B. The reaction over the past year is negative, with Delta posting the worst performance followed by Rebosis and Dipula units recouping some of the losses over the past two years. The reasons for underperformance ranges from the change in policy from the DPW with regards to the length of leases from government and escalations, unsuccessful corporate action specifically linking Rebosis, Delta and Ascension and balance sheet management, specifically concern over 37

FEATURE

the exposure to interest rate cycle in the current economic environment. TM: Would BEE have worked in the listed property sector and what are some of the most successful deals to date? TR: A BEE transaction that was an innovative and truly transformative deal with benefits to both parties is the Vukile and Encha deal. The transaction entailed Encha injecting their R1bn government portfolio into Vukile. The Vukile and Encha government properties will be managed through a black-owned manco as per the requirements for DPW to secure longer leases. It must, however, be noted that there has been a change in policy from DPW to address the backlog of leases and all property owners only qualified for three years at 5.5% escalation. The policy has since been reversed after the backlog of leases was addressed. Encha will immediately diversify their government portfolio and get exposure to a balanced commercial property portfolio. Vukile would benefit from the transaction because of improved BEE credentials through ownership and management control elements of the scorecard. The innovative aspect of the structure is the equity funding model which minimises dilution of empowerment credentials. A recent capital raise by Vukile to raise R600m was split between issue of Vukile units to the value of R350m and to Encha for R250m so that there is no dilution. TM: Do you think listed property companies are working at addressing transformation in their respective companies? TR: Property companies generally have indicated support for transformation, but transformation has been challenging to effect, especially 38

at ownership level, where the sector is obviously capital-intensive. More innovative BEE ownership structures need to be considered. Regarding broader transformation, it is in the tenantsâ&#x20AC;&#x2122; interest for property funds to achieve their highest possible BEE rating as it influences the preferential procurement assessment of these tenants in recording their own BEE rating. Lastly, employment equity must become a critical component within transformation, particularly with more senior black executives required in the well-established and larger property companies. TM: There is no doubt that most companies are addressing a lack of skills through their internship programmes. Are these working in your opinion? And what else can companies do to address the slow pace of transformation? TR: Tap into high school and introduce property-related concepts and ignite interest. The more awareness you have at high school level of property as a career choice, the more likely there is going to be a sufficient pool of graduates in later years. TM: We have seen black-managed property funds, but the trend seems to have slowed down drastically, what is hampering this trend? Is government playing any meaningful role in helping black players enter the market? Has government lease policy has helped or not? TR: Government leases provide a strong underpin for any black player attempting to grow in the sector, as sovereign risk theoretically is the best tenant to be exposed to. However, with the restructuring of DPWâ&#x20AC;&#x2122;s lease processes, following the initial challenges, the market has discounted

these leases as riskier than they actually are. Once consistency is realised in terms of leases linked to underlying quality of the property, the market should start responding positively. With more visibility and transparency by DPW on policy, we anticipate the market will reprice perceived risk and black players will benefit from a deserved rerating in their share prices. TM: Almost all black-managed property funds have significant government-tenanted properties, but to stay competitive in the listed property sector these funds are compelled to look for growth elsewhere. Are these funds growing and competitive? TR: Yes, each player has diversified into the retail space, and are actively looking at the rest of Africa with Delta having already listed Delta International. TM: Of the three black players, who would you say has been the most successful in the listed property sector and why? TR: Rebosis has the best quality portfolio of the four black players in the market, and we sense that the company is poised for a rerating on the market once it completes its purchase of Ascension. *Meago is a black-owned asset management company that invests in listed property funds on behalf of institutional investors and pension funds. ď&#x201A;Ł

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OPINION

Strategy needed to accelerate pace of transformation By Hatla Ntene

lot has been written about transformation of the property industry in the past 20 years, and a policy framework is in place. The challenge now is implementation. The main issue for black property players has been policy confusion. Every time there is a change in the executive of concerned departments, progress in the implementation is either stopped or considerably slowed down.

The main driver of transformation has been Department of Public Works, which increased the pace of transformation in 2010 when it declared that it would sign 10-year leases with companies that had BEE credentials. While this was a good policy, checks and balances were not put in place to evaluate the BEE credentials of companies to prevent fronting. Government leases became 39

OPINION

Transformation is not a luxury. It is a business imperative. low-hanging fruits, opening doors to collusion between some employees of the department and unscrupulous companies. Once again, what transpired subsequent to this phenomenon has been documented. The encouraging fact is that the clean-up of the mess caused by this has started and will hopefully be completed soon. It is our hope that the industry will emerge strong after this process. The BEE policy resulted in established property owners selling their government-tenanted office portfolio to BEE companies. This BEE leasing strategy has created about R13 billion BEE companies listed on the Johannesburg Stock Exchange (JSE). It has also created few unlisted blackowned property companies. Black companies listed on JSE are Rebosis, Delta Property Fund and Ascension Property Fund. Encha Properties has exposure to JSE as a result of its deal with Vukile Property Fund. Another property fund is Indite Property Fund. This is proof that BEE strategy has been a success. In the short term, there is room for those who raise funding from the financial institutions to purchase a 40

stake in companies and serve as board members. Those who use this method of building property businesses will create wealth and will be celebrated by the next generation. The current status is that the Department of Public Works is signing three-year leases with established property owners, including BEE companies at 5.5% escalation as per Treasury directive. This decision has adversely affected property owners as they are unable to refinance maintenance programme and expansion of their portfolios. We hope this decision will be reversed soon. Otherwise gains achieved by BEE companies will be reversed. As a result of short leases being signed and low escalation some of the BEE companies have put their properties on the market. It has taken 20 years to achieve 5% BEE, it will at this rate take 140 years to achieve 50% BEE government-leased buildings. This is an unacceptably a long time. A strategy has to be designed to accelerate pace of BEE transformation. The increase in the percentage of BEE ownership of real estate will benefit those in the services industry. There will be opportunities for property

management, facilities management, plumbing, electrical and so on. The procurement of leases where a short period specified on tender documents for landlord to provide building favours those who already have stock. Property leasing strategy has to be put in place to allow new entrants to sign development agreements with adequate time to develop suitable buildings. The current practice is for BEE companies to make offers for buildings subject to signing lease agreements. While this has worked in some cases, it has also created disappointments where owners of buildings have reneged on the transaction or increased the sale price once the BEE company has been successful with the tender. This practice has led to the situation where buildings were bought above the market price. As a result, the rental rate offered to the client would also be above market. Transformation is not a luxury. It is a business imperative. If the current status quo is left unchanged, it will lead to previously disadvantaged losing patience and resorting to quick solutions that may create uncertainty in the market. ď&#x201A;Ł

PROPERTY FOCUS l NOVEMBER 2014

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FEATURE

Image: Johannes Dreyer

PROPERTY FOCUS l NOVEMBER 2014

FEATURE

Property Sector Charter Council has its work cut out for it By Phakama Mbonambi

Portia Tau-Sekati

he property sector has always been characterised by inequality, meaning that the property sector was closed off to previously disadvantaged players. Those who managed to break into the industry soon ran into a huge obstacle – a lack of resources (in particular, financing) to compete effectively. To remedy the situation, the Property Sector Charter Council gazetted the Property Sector charter under Section 12 in 2007, this is a document where all associations operating in the industry sector committed themselves to the transformation of the property sector. The Charter bound members to effect transformation in the property industry. The Council was gazetted into law under Section 9 (1) in June 2012 although the process to create it dates back to 2003. The Council has 21 members, associations with different agendas and points of emphasis in the property industry. SAIBPP, a proponent of transformation in the property sector,

is one of the Council’s members. Others include South African Property Owners Association (SAPOA), Estate Agencies Affairs Board (EAAB) and Women Property Network (WPN). “Our members are associations, not individuals. They are different in their missions, and as a Council we represent their interests,” explains Council CEO Portia Tau-Sekati. The Council, whose line ministry is the Department of Public Works, has a board that represents every segment of the property industry. It also has an executive committee that helps with everyday operations. Tau-Sekati became CEO in 2008 after years of being involved in the drafting of the property charter. Inducing change in the property sector is the core of the council’s work. “Our mandate is in line with policy of Broad-Based Black Economic Empowerment Act (B-BBEE Act), a mechanism by the South African government to enable previously disadvantaged individuals to play a

meaningful role in the mainstream economy and create a development mechanism. Such inclusive participation in the economy will help optimise the country’s growth,” says Tau-Sekati. The Council’s chief mandate is to establish principles to implement B-BBEE in the property sector. It outlines transformation targets and sets up measures to monitor companies’ level of transformation in respect to B-BBEE. Engagements in the property sector started in 2003, and its establishment followed the principles of B-BBEE Act. These codes, which are supervised by the Department of Trade and Industry, use a scorecard composed of elements of transformation that carry a numerical value targets. Using these elements in the scorecards, companies are rated between levels one and nine and then issued with certificates (where level nine is considered a non-compliant). The greater the effort to transform, the lower the BEE rating on your 43

FEATURE

certificate. That means a greater the likelihood of being a preferred supplier, and securing business particularly from government departments or parastals. So, a BEE rating can determine whether a business deal is clinched or lost. This set-up applies to all companies operating in the South African business including those operating in the property sector. When the Act was introduced in 2007 elements making up the Codes of Good Practice were ownership, management

focus, to look at areas of our operation where we can improve.”

about which path to take to achieve transformation.

Tau-Sekati stresses that the Council’s revised codes “will have a positive impact on the economy as a whole” not just the property sector.

However, as Council CEO, she has to be impartial and ensure that everyone’s views “whether you agree with them or not” are heard. What will happen if the deadlock continues? Can the Council impose its will, no matter how unpopular, to break the impasse? “Ideally you want to have consensus, but that is not always possible to achieve,” says Tau-Sekati. “However, it’s still crucial to create a common understanding among all industry players. That is why in this debate facts are crucial to avoid people representing themselves individually as opposed to being guided by industry norms and status quo. We also need to remember why we exist, which is to drive transformation.”

But the process of realigning its codes has not been as easy or as quick as Tau-Sekati had expected. The debates have been extremely vigorous and members are debating the weighting and targets under each code or

We need to help government drive the prosperity of the entire country. Job creation is a key part of that process. control, employment equity, skills development, preferential procurement, enterprise development, and socioeconomic development. But in October 2013, government, wishing to inject more bite into this legislation, revised the codes. They shrank from seven to five after management control and employment equity elements were merged into one element, and so were preferential procurement and enterprise development. In addition, a portion of the old enterprise development was allocated under supplier development. These changes prompted all sector codes, including the Property Sector Council, to also revise their own codes so they could be in sync with B-BBEE Act. “Firstly, our codes were revised to align with new priorities of government such as localisation, industrialisation and job creation. As a property sector, we don’t live in isolation. We need to help government drive the prosperity of the entire country. Job creation is a key part of that process,” says Tau-Sekati. “Secondly, the realignment of our codes has enabled us to sharpen our 44

element. These debates, which can be quite “robust”, highlight a wide chasm between industry players in moving the sector forward. The feuding ideologies are between established and emerging business. One side puts more focus on elements driving broad-based empowerment while the other extends that same ideology to include ownership and management control. “As one black business participant often puts it: ‘Whoever owns determines the value chain.’ This is what the argument is really about,” says Tau-Sekati. In this debate, Tau-Sekati stresses, “neither side is wrong”. No matter how time-consuming, the discussions have a positive element. “It’s good for people to debate so passionately. It shows they have their hearts and minds in the matter at hand. That’s where transformation lies. It’s better than to have people agreeing to everything without questioning or are confused or, worse, apathetic,” she says. For her the debates essentially reflect a divergence of opinion

However, Tau-Sekati feels a jolt of fear each time she looks at the calendar. The deadline is fast approaching. With limited progress of a resolution to the discussions, pressure is mounting for the Council. “We need to have a revised Property Sector Codes by 1 May 2015,” she says. “For that to happen we need to finish the consultation process by the end of this year since there is still a legal process the revised codes must go through. Then there’s a 60-day public commentary process and a 30-day analysis before the final gazette. So, before the final deadline, there’s about three months that we need to cater for in our schedule.” But one thing is for sure – transformation of the property sector is non-negotiable. “B-BBEE is a time-based legislation. When the playing field is deemed level enough to allow for free-for-all competition it will be done away with,” says Tau-Sekati. “Perhaps it’s better to

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answer the difficult questions now than later. Possibly there is no later. Transformation policies may be later reviewed but I don’t see that happening any sooner than five years. This is the time for all organisations to put their cards on the table in terms of deciding what kind of sector we want.” Once an agreement between players is in place, the council will be faced with yet another herculean task – implementation. “Personally, I’d like us to finish process of giving input now so we can finalise the document and focus on implementation; that’s where the difficult part really is,” she says. One section of the property sector that worries her is the residential industry. “It remains untransformed largely because companies are family-owned and run. We have seen limited transformation effort from this industry. We may have to balance our methodology to include both a push and a pull. Rather than rely on onesided method to drive transformation, government will be expected to also push in order to achieve transformation in this sector,” says Tau-Sekati. Apart from putting pressure on established business to transform, TauSekati believes there are other avenues that could also be explored. She singles out government as a sleeping giant in the transformation of the property industry. “Government needs to come with its own power mechanism and influence to help transform the industry,” says Tau-Sekati. “This refers to all levers of government – national, provincial and municipal. For instance, Johannesburg Property Company has a huge property portfolio worth more than R20 billion. That should help black participants enter the market. The nine key metros and provincial governments could actively get black companies to meaningfully

participate in the property industry – with all its various classes of assets local municipalities own. Established companies could be requested to collaborate with less established ones for skills development and sharing of experience. These are the kind of innovative avenues we need to explore when it comes to transformation.” While a lot still needs to be done on the transformation front, Tau-Sekati notes some encouraging milestones were reached in the past few years. The biggest one was the listing of originally black asset management companies namely – Rebosis, Delta, Dipula and Ascension. “We never had black listed companies. One would like to see more of such property funds,” she says. Tau-Sekati is optimistic that major transformation strides will take place in the future. “Currently, government talks about the creation of 100 black industrialists in the next three years – 10 per sector. As a sector, I’d like to see us preparing the ground for the creation of our own industrialists. More than that, I’d like to see at least three black residential franchises, more listed companies emanate from blackowned property companies,” she says. “I’d also like to see the participation of black estate agents grow to at least 40%, to see some asset management companies, some black property research companies, black property marketing, public relations and events companies in the sector, more black valuations companies. I’d also like to see us helping government utilise various models to drive transformation. We’d like to see women play a greater role in the property sector and have listed funds run by women-led companies. We’d also like to see other designated groups such as youth play a role in the sector.” 

Once allCouncil’s this is done,members she says, the rest The will fall into place.  APUTMC – Association of Property Unit Trust Management Companies AWIP Association of Women in Property BPVA SA Council of Property Valuers Association EAAB Estate Agencies Affairs Board IEASA Institute of Estate Agents of South Africa NEDLAC National Economic Development and labour Council NDPW National Department of Public Works NPF National Property Forum PLSA Property Loan Stock Associations WPN Women’s Property Network SABTACO South African Black Technical and Allied Career Organization SACSC SA Council of Shopping Centers SAFMA SA Facilities Managers Association SACPVP SA Council for the Property Valuers Profession SAIBPP South African Institute of Black Property SAPOA South African Property Owners Association

OPINION

of BEE. Sadly, even with these lower targets, the sector is making sluggish progress.

A pressing deadline Property sector needs to meet the deadline of adopting the Charter By Marius Muller

ire consequences will result if the property sector fails to adopt the property charter that took so many years to craft. The sector has to adopt the charter by April 2015. Failure to meet this deadline could see the charter falling away and the property sector will be automatically bound by the more stringent BEE Codes as prescribed by the Department of Trade and Industry (DTI). This will place it under immense pressure to speed up transformation, says Marius Muller, CEO of Pareto. At the moment, the charter has revised its codes to be in line with government policy and discussions among its members about the best path to take are still taking place. With the new codes there’s a great opportunity to relook at how the property sector achieves BEE and ensure it is done in a sustainable way. In general, the sector’s pace of transformation has been slow. After 20 years of democracy, we should be seeing more change. More still needs to be done. The first BEE codes were introduced in 2007, after which the Property Sector Transformation Charter was

separately legislated but government revised the BEE codes in October 2013. The sector has until the end of April 2015 to ensure its charter is compliant with the new codes. Much work was done by the sector to legislate its own transformation charter, so it makes sense to align it and comply with the new standards set out by the DTI in order to move the industry forward. The property charter allows for more gradual implementation of BEE, compared with the revised BEE codes, which would compel stringent transformation at a faster pace. The big change in the revised codes is the adherence to a minimum score in three areas: ownership, skills development, and enterprise and supply development. A business must score a minimum of 40% of their target in the each of these areas, or it will drop a BEE level. However, the implications for the property sector go beyond this. The real challenge for the property sector is that it previously enjoyed certain concessions, which translated into lower transformation targets and this manifested in slower implementation

Should the alignment of the Property Charter fail to meet its deadline, it could leave the listed property sector, in particular, scrambling to make up lost ground. For most companies outside of the property sector, black ownership must be more than 25% for transformation to have taken place. In the case of most listed companies, 40% of ownership is mandated because of shareholding by pension funds, which have a broad base of policyholders. So, listed companies are required to achieve 25% black ownership of the remaining 60% shareholding or 15% black ownership. Yet for listed property companies, the level of mandated investment is 70%. So, they only need 7.5% black ownership to be transformed. Business outside of the property sector has generally been given 10 years to reach their 15% black ownership targets whereas listed property companies have 20 years to achieve their target of 7.5%. Nearly 10 years down the line, the property sector is nowhere near its halfway mark of 3.75% of black ownership, a clear indication that there is a lack of transformation in the sector. From a sustainability perspective, this puts the sector at a disadvantage. “It’s not the principle that’s the problem. It’s the application,” he says. “There are companies that have been successful with their transformation initiatives and their efforts are to be commended. But we still need to consider why transformation isn’t happening in the property sector and how we can do it differently to make it work in future. As an industry we really do have a responsibility to openly

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Transformation starts with the people driving the process. Pareto has a Level One BEE rating and all members of its executive team are black. The company also has female and disabled representation. In the listed property sector today, there is little transformation in executive teams. A recent IPD study, which excluded duallisted and internationally domiciled companies, revealed that black people fill only 11 of the 78 executive director positions in the listed property sector and only one is female. Dig a little deeper and you’ll discover that only two of these black directors have risen to

their positions as part of an established business. The rest have come from black business and most of them on the basis of government-backed initiatives. Transformation is about changing the status quo rather than diluting it.

Image: Elvis Ntombela

and honestly discuss our contribution to transformation, particularly given the sensitivity and legacy of property ownership in South Africa.

While transformation in the property sector is a big issue, it shouldn’t be an emotive one. We need to look at the facts and figures and ensure they make sense. What is crystal clear is that we’re running out of time to ensure compliance with the revised BEE codes for the sector. Given the lack of progress in our sector, it may be of greater national interest for the sector to rather revert to the generic BEE codes. 

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FEATURE

Women in property Reflections on what needs to be done to empower women in the property industry By Thabang Mokopanele

Ipeleng Mkhari

ransformation of the commerical property industry is more than just balancing the racial scale. It is also about fixing glaring gender disparities that are endemic in the sector. Indeed, for a long time, as with many sectors of the South African economy, women have not advanced to the top echelons whether as property owners or as leaders of established companies. No single listed property company is led by a woman. Even 20 years into democracy such gender transformation has been slow. One effort to transform the industry was the formation of the Womenâ&#x20AC;&#x2122;s Property Network (WPN). The

organisation aims to be a platform for women to network, build business contacts and enhance their professional succees in the industry. One of the leading lights of the property industry and a former leader of WPN is Ipeleng Mkhari, CEO of Motseng Investment Holding. This is how she sees the barriers to women advancement in the property industry: â&#x20AC;&#x2DC;The challenge of gender parity in the property sector is not dissimilar to challenges in other business sectors. When one considers that the property sector is very broad in nature, we tend to find women located in service businesses that feed into the listed property sector.

One of the greatest obstacles to general access and advancement in the sector is education. As a past chairperson of WPN, I established the first education trust during my term, between 2007 and 2009. The education trust is aimed at financially supporting young women in their property studies. The education trust specifically targets young women in the property sector and has seen a number of women advancing to more senior roles in the property industry. I now sit as a trustee of the WPN education trust. The second challenge in the advancement of women to senior roles in the listed sector is the general lack of exposure in this market. As

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The challenge of gender parity in the property sector is not dissimilar to challenges in other business sectors. a woman who entered this market virtually untrained in property, my exposure to the field has been based on entrepreneurial (selftrained) experience. My past roles as independent non-executive director on a few listed property funds played a critical part of this exposure.

The sector, through bodies such as SAPOA and WPN, is addressing the challenges by creating awareness of these concerns at the most senior levels. I sit on the SAPOA board. One of my purposes at the board is to engage further on more robust ways to improve gender parity in our sector.

Janys Finn

so. Just to note that the chair of Rebosis is female, Dr Anna Mokgokong and I have not been appointed in any position of SAPOA.’ 

anys Finn, a financial director at Rebosis Property Fund, has this to say about gender in the property industry. ‘In general, I do not view the representation of women in the property sector as being different to the general representation of other sectors listed on the Johannesburg Stock Exchange. I believe that the ceilings we encounter are largely due to the challenges faced by balancing our careers with the demands of raising a family and running a home. These challenges are exacerbated in a country that doesn’t necessarily cater for the working woman. Internationally, flexi-hours, work from home and day care facilities within companies are far more common place and acceptable than in South Africa. I do believe that an organisation such as WPN can help by creating an awareness of the issues faced by women in the sector. In turn, this may result in an increase in the number of women in the sector. But WPN still needs to increase its profile. However, I do understand that there are plans to do

In essence the role of advancing women in the sector is every property employers’ responsibility. To my knowledge, the first non executive female chairperson of a listed property fund is Dr Anna Mokgokong of Rebosis. We do need to see many more similar examples in the sector. I believe it’s a behavioural challenge as much as it is a gender parity challenge.’

The ceilings we encounter are largely due to the challenges faced bybalancing our careers with the demands of raising a family and running a home.

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There has been a lot of progress in the past 10 years Thabang Mokopanele quizzes Amelia Beattie, Chief Investment Officer â&#x20AC;&#x201C; StanLib Direct Property Fund, about women advancement in property.

Thabang Mokopanele (TM): In general, why there are so few women who re operationally involved in the commercial property space? Amelia Beattie (AB): I think there has been a lot of progress in the past 10 years. We need to celebrate where we have come from and where we are now. Many women have achieved really phenomenally things in the industry. But it canâ&#x20AC;&#x2122;t all happen overnight. TM: What challenges do women face

in the sector? AB: Women are faced with many choices. In addition to being CIOs, MDs, GMs, we are also wives and mothers and who equally have huge responsibilities. It is our main duty to ensure that we are part of creating sustainable social fibre where we educate our children about being able to make a difference in the world of business while also not neglecting our main duties of education and caring for our children. For me to be able to do

what I do, I need the support from my husband. Unless he is prepared to assist me in what I want to do, I will never get there. But it is a trade-off. It is not a one-way thing. For him to support me, I need to support him too. So, before I am able to attend to my duty of providing the best property investment returns to my investors and building a great property business, I need to make sure I attend to my foremost duty of investing in my marriage and investing in my children. That is not a challenge. It is a reality and one we have a duty 51

FEATURE

to fulfil with much love. If I provide property investment returns at the cost of investing in my family, I have failed. TM: Who needs address this lack of women representation in the sector? AB: It is all our duty to address this. Corporate South Africa needs to make sure it creates environments for women to be able to work and do the other things that they need to do. But it is also the duty of women themselves – if you want to excel in your career (whether property or anywhere else), you need to ensure that you have your own support systems in place so you can do what you need to do. It helps greatly if the leadership in your business understands and embrace this. My advice to women is to choose companies that do this. I am blessed to work in an organisation that understand this. TM: There is a perception that males heading listed property companies are an old boys club with not willingness to accommodate females. Is this true? AB: I have close relationships with many males heading listed property companies in South Africa. I have their respect and they engage with me as a property professional. It doesn’t matter to them that I am a woman. I am not sure if they are not willing to accommodate females. I think it is just a process that needs to be allowed to happen. We need to accelerate it as best as we can through educating the industry (men and women) about what needs to be done to accommodate females in the industry. TM: What needs to be done to improve female representation? AB: Women need to stop feeling guilty. We need to own our places wherever 52

The ceilings we encounter are largely due to the challenges faced bybalancing our careers with the demands of raising a family and running a home.

we operate and not make excuses for the fact that we sometimes can’t do some of the things. We need to make it understood that we also have other roles and that we are happy to fulfil these. Once we stop feeling guilty, those around us will naturally provide more opportunities as the result of a more positive environment. And, most of all, our children will grow up in an environment not riddled with guilt, but one where they know that mom’s can be fantastic at work and a great mother too! TM: You are SAPOA president. Is women representation on your agenda? AB: I always have women representation on my agenda. I am not sure it needs to be the on the agenda of the SAPOA president as a specific issue. It needs to be on our agenda through all that we do. I believe that we need to promote the existence of sustainable business practices that include women and, in time, women will be able to play a role in the industry in the rightful place. Both Ipeleng and I that are currently on the SAPOA board (and following in the footsteps of Marna vd Walt & Lynette Finlay that were there previously) always do our best to provide a balanced perspective on all issues. That way we illustrate our value of women & that we are not there because we are women, but because of the intrinsic value that we bring to the table.

TM: What can the property industry do to encourage women to enter the sector? AB: We need to learn to celebrate the successes of women in the industry more often – instead of wondering why there are not more women CEOs – celebrate every women for what they achieved in getting where they are today. Create more learning opportunities. Take on a male mentor (I had the privileged of being mentored by some of the most successful men in the industry). Females need to learn how to ensure that the value they create are noticed! TM: Is the Women Property Network (WPN) effective in lobbying on behalf of women? AB: WPN is about giving women a platform to learn from each other, but most importantly to understand that you can’t be successful at all costs. You have to develop a balanced approach. That is what WPN is focused on. A balanced approach is much more important than lobbying for the sake of lobbying. In this manner we create an industry of successful women that also play a meaningful part in creating a sustainable society around them.  This interview first appeared in Business Day.

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Make yourself heard Q&A with Sharon Wapnick, Chairman of Premium Properties and Octodec Investments

You and Dr Anna Mokgokong are the only two women chairing listed property companies on the Johannesburg Stock Exchange. Whatâ&#x20AC;&#x2122;s your take on female representation in corporate South Africa? Sharon Wapnick (SW) It is disappointing that despite the abundance of talent, women on balance have been slow to break into corporate South Africa. I do believe this will change in time. Your father started the company you are chairing what are some of the lessons you learned from him? SW I have learnt so much from him. He taught me to trust my instincts, the benefits of gearing. That whatâ&#x20AC;&#x2122;s expensive today is cheap tomorrow, to keep my eye on the cash flow and

FEATURE

always deal on a current balance sheet. He also instilled in me a strong sense of duty and the need to give back to society and one’s community in one way or another. You are also a lawyer. How do you balance chairing a listed property company and law? SW: By working very hard! I love what I do. There is no doubt that my legal training has equipped me to discharge my duties as a director and handle myself in the boardroom. What advice can you give to young women who are in senior positions in commercial property? SW: Make yourself heard and have the confidence, self-belief and determination to push through to higher levels. Don’t think that just because objectively you deserve the promotion it will spontaneously happen. You have to make it happen. What are some of the key duties of a chairperson of a listed property? SW: I don’t think that the duties are any different to those of a chairman’s of any other listed company. They include guiding the strategy and future direction of the company, ensuring that the board is effective in implementing strategy and decisions, planning the agendas of board meetings, ensuring that the board receives timely and relevant information for board meetings, presiding at and running board meetings, doing the same for shareholder meetings, monitoring the performance and contribution of each board member, directing the nomination of directors and composition of the board and ensuring effective communication with stakeholders. 54

Women need to be assertive and to promote themselves more. The ability to resist being bullied also helps.

The company you chair has institutional investors and is a family business. What’s your vision for the company? SW: Because we are listed on the JSE with institutional investors, we play according to the rules of that playing field. We regard our business as entrepreneur rather than family-driven. We derive our rental income from residential, retail, office and industrial premises. We strive to constantly improve the quality of our properties and to provide good, clean, safe and affordable accommodation in well located areas while still delivering growth in distributions for our shareholders. Female board members are few on the JSE. Why is this so and what can be done? SW: There is no logical reason for this other than the lag caused by a history of discrimination. Women have excelled in business and in various demanding professions and there is no real reason for them not to do the same on the directorate of companies listed on the JSE. If you think chauvinism is dead you are wrong! Women need to be assertive and to promote themselves more. The ability to resist being bullied also helps. David Ben Gurion used to call Golda Meir, Israel’s first and the world’s third female Prime Minister, “the best man in the government”. My take on that is that the best man for the job is a woman.

How do you describe your leadership qualities? SW: I like to have regard to the views of my directors. I see little point in going to the trouble and expense of having them on board if I don’t. I also like to keep in touch with the views of our investors and other stakeholders. I prefer to achieve our objectives by consensus though I don’t mind flexing my muscles when necessary. What advice do you have for aspiring women leaders? SW: Create a support system that enables you to pursue your dreams. Set goals and don’t let detractors or difficult situations along the way deter you. Be prepared to work hard and to have to sometimes tough it out. What is the future of the listed property sector? SW: I’m a great believer in the future of the listed property sector underpinned as it is with bricks and mortar. As with any asset class, there will be ups and downs. Property investment is for the long term, a marathon not a sprint. The introduction of REITS also brings a new dimension to property investment.  This interview first appeared in Business Day

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A priceless investment Grooming the next generation of property developers By Phakama Mbonambi

o boost the skills base of entrants in the property sector, SAIBPP teamed up with Pareto to sponsor studies of two students – Nthabiseng Makgabo and Thuto Mokoena – who are enrolled for a BSc in Property Studies at Wits University. The bursary programme, which started in 2013, covers full tuition and accommodation, and offers recipients a stipend. Grooming a new generation of property practitioners has long been the goal of SAIBPP. The idea is to unearth professionals who are knowledgeable and can hold their own ground in the property sector. The Wits academic programme exposes students to up-to-the-minute thinking and trends in property investment and development as well as skills required by property practitioners. In first year, students do a course in Construction Planning and Design, Theory and Practice of Quantity Surveying, Mathematics and

Planning for Property Developers. The idea is to give students exposure to finance and construction elements of the property industry. With each academic year, courses change in nature and scope. By the time they finish the degree and join the property field, graduates should be able to “think independently, creatively and analytically”. The graduates’ career options within the industry are vast – finance and investment, property asset management, letting and leasing of property, property development, valuations, as well as opportunities at all levels in the public and private sector. It seems then Nthabiseng and Thuto are on the right path to acquiring the right set of skills. Studies are going well for both of them. “I’ve always liked the idea of property and I had always wished to pursue property as a career in one way or the other,” says Nthabiseng, who is in second year. “I just didn’t know how I was going to do it. I initially wanted to

do a BCom Accounting degree and then enrol for Honours in Property Studies. When I applied at Wits, the degree had been revamped and so it was the perfect time to start.” Thuto, on the other hand, was compelled by practical reasons to enrol for the course. “I chose to study this course because there aren’t many people studying it which means it is going to be easier for me to find a job and build a career in the industry,” says Thuto, who is doing first year. “I did not know much about property but Dr Samuel Azasu, the head of the course, gave us information about it. In the end, I fell in love with property.” But how did they hear about SAIBPP’s bursary programme in the first place? Both were already enrolled at Wits when they saw an advert posted on a board at the School of Construction, Economics and Management – the BSc programme falls under the school. 55

FEATURE

Image: Johannes Dreyer

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They applied and went to a series of interviews before getting the bursary, which, as intended, proved to be a game changer in their academic lives. “This bursary meant that I could continue going to school,” says Nthabiseng, who hails from Pietermaritzburg, KwaZulu-Natal. “I wouldn’t have been able to afford to complete my second year had it not been for this scholarship. It allows me to do everything except worry about money. As a result, I’m able to excel in my studies.” Even for Thuto, who hails from Naledi, Soweto, SAIBPP’s help came when she needed it most, when she was about to be swallowed by a vortex of personal despair. “I’m from a very disadvantaged neighbourhood,” says Thuto. “My parents were struggling with my tuition fees. Both of them are not really working. My dad is a cab driver and he brings in whatever money he can make. My mother lost her administration clerk job in the middle of last year. That turn of events greatly affected me. I used to cry at night and have restless sleep. Then I got the SAIBPP bursary. It was a miracle. It’s the best gift my family and I ever got.” The bursary will run until Nthabiseng and Thuto finish their studies. The only condition for continued financial support is that they get an average pass of 60% and 75% in majors every year. (verify with SAIBPP) After graduating, Pareto has the first right of refusal to employ them. So far, both of them don’t feel neglected at an institution of higher learning. “SAIBPP, together with Pareto, often check up on us to see if everything is okay, if

I hope to use my degree to get a foot in the industry. – Nthabiseng I would love to find a job and build a career with this degree. – Thuto we are still coping academically and in our personal lives,” says Thuto. Nthabiseng also values the interaction with SAIBPP board members who are “very warm” and she mostly calls Hawa, SAIBPP’s office manager, “if I need assistance with anything. She is very kind and helpful.” Certainly, the future looks bright for these two youngsters, a new world is slowly opening to them. They are studying a dynamic course in a city that is the nerve centre of the country’s economy. “I hope to use my degree to get a foot in the industry,” says Nthabiseng. “I hope to eventually become a property developer. In the meantime, I’m keen to learn as much as I can in the many different fields in real estate. I don’t really mind where I start.”

many career opportunities to choose from.” For these two students, SAIBPP board members are a source of inspiration, true role models. “SAIBPP board members are successful through hard work, dedication and commitment in their jobs. They look professional and they dress like professionals. I hope one day I can be one of them,” says Thuto. “They also taught me that in this field a person can never make it alone. I appreciate everything and changes they have done for my family and me. A special thank you to SAIBPP.” 

The idea of job security in the property sector excites Thuto: “I know that I am secure in finding a job with this degree. I would love to find a job and build a career with this degree. Hopefully, one day I will become an asset manager or a property developer.” For those wishing to study property, Nthabiseng has the following advice: “go for it”. Thuto feels the same: “They must study hard in matric and get good results. Property is fun to study. You learn a lot of things and there are so 57

OPINION

Who is pulling the trigger?

he South African commercial property sector has evolved over the past 20 years, with a higher rate of evolution occurring in the past 10 years.

By Kundayi Munzara

lending and core activities and property assets in-turn became noncore.

Large commercial property assets, including office buildings and super regional shopping centres, were predominantly held by financial institutions and life insurance companies in South Africa â&#x20AC;&#x201C; this may have been more about circumstance as opposed to strategy as these companies were banned from investing offshore and placed excess funds into real estate assets within our borders.

This was not the birth of the listed property sector per se in the same way that the iPad was not the birth of electronic tablet, but it was a start to significant development of the sector. Just over a decade ago we started to see the emergence of more listed property funds led by founders or entrepreneurs who had convinced their managers sitting in corporates to sell assets to them and kick-start their huge ambitions to build property empires. Common names such as Des De Beer and Paul Theodosiou come to mind.

The opening up of the economy after1994 saw financial institutions refocus their businesses towards

This period also saw banks offload their property assets in an attempt to focus on their core activities

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of lending to business. We saw Momentum/Rand Merchant Bank sell much of its portfolio into what became Emira Property Fund, and Investec sell its Johannesburg and Cape Town offices to beef up Growthpoint Properties portfolio. Importantly, the sector began to attract more talented professionals who began to introduce exotic structures such as swaps, securitisations and corporate bonds to enhance balance sheet-driven performance for shareholders. There was also a higher degree of specialisation at asset level as we saw the likes of Hyprop evolve into a focussed retail fund and the listing of other funds such as Hospitality. New ideas entered the fray around 2006 where we saw the listing of Madison, a property asset manager that held no direct assets at all. Then there was Apexhi that introduced the dual unit (A and B) structure, and the hybrid/Octopus structure where a fund, in this case Redefine and Pangbourne, held direct property assets and shares in other listed property companies. During this period the listed property sector played its part with respect to black economic empowerment (BEE) transactions where the companies raised capital by issuing shares to BEE consortiums and arranged the funding to buy the shares with the various banks. Growthpoint, Redefine, Hyprop, Vukile, Resilient and SA Corporate among many others, with slight variations in transaction structures, all did BEE transactions in the early to mid-2000s. Hyprop and Redefine also played key parts in transferring skills, balance sheet support and

assets to then unlisted funds Vunani (Now Texton) and Dipula Property Funds. Many lessons were learnt over this period but one often untold story is of consortiums that “disappeared” from the sector by selling their shares once they had made their money. This may have been a missed opportunity for the start of black property empires. Government has also played its part to promote the emergence of black property players. In 2011, the Department of Public Works (DPW) stopped signing long-term leases with established property companies or individual landlords who lacked empowerment credentials. This was a catalyst for the listing of so-called

aforementioned ABSIP conference, Mazi Capital founder Malungelo Zimbola highlighted that BEE may not only be about ownership of companies but about “who was pulling the trigger”. Are there black people in key leadership positions actually determining the direction of investments? So, on one hand, most of the dedicated property asset management teams have black people in key positions of allocating capital into the sector. These companies have been entrusted by pension funds and retail investors to invest on their behalf. Buy-side listed property teams such as Sesfikile Capital, Meago, Stanlib, Momentum and ABSA have a majority black investment teams

Pointing out the lack of transformation is easy. However, the issue is complex at best and the hard work is in looking to chart a new way forward. BEE funds, or funds with BEE credentials such as Ascension, Delta, Dipula and Rebosis, with a combined market capitalisation of R18bn (about 4% of the total market capitalisation of the sector). The listed property sector has a market capitalisation of about R400bn. Interestingly, the South African Institute of Black Property Practitioner (SAIBPP) holds its one-day conference a few months after the Association of Black Securities Investment Professionals (ABSIP) held a similar summit that highlighted the lack of transformation in the financial services industry, with particular reference to the asset management sub-sector. The SAIBPP gathering will likely face a similar scenario. At the

“pulling the trigger” and making the asset allocation/investment decisions, irrespective of the ownership at company level. Furthermore, some of the top sell side property analysts, including Naeem Tilly at Avior, Vincent Anthonyrajah and Bandile Zondo at Standard Bank, Nazeem Samsodien at Macquarie, and Anil Ramjee at Vunani are black – this is an important development. However, on the other hand, the industry lacks transformation at all levels from CEOs of companies, developers, contractors, direct property asset managers. In fact of many shopping centres in South Africa, despite full of black patrons, only have a handful of black companies managing or black people 59

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as centre managers. It is easy to pick out the minority black leaders at executive level in the property market, including Rebosis’ (and soon Ascension’s) Sisa Ngebulana, Dipula’s Izak Peterson, Sandile Nomvete of Delta Properties, Sedise Moseneke of Encha Properties, Antonette Basson of SA Corporate and Ridwaan Asmaal of Hospitality, Imraan Suleman of Arrowhead – it should not be this easy to name them. Pointing out the lack of transformation is easy. However, the issue is complex at best and the hard work is in looking to chart a new way forward. The DPW’s policy of giving preference to black property players played a meaningful role but this is only one tenet of what should be a multi-faceted strategy. There should be a way, either directly from government or a governmentlinked DFI (Development Finance Institutions) or Pension Funds, to fund black property professionals looking to build up portfolios. In a classic property deal, around 30% to 40% equity is required and this is where many black players have fallen short and banks are currently 60

unwilling to relax these parameters, which is well within their rights as private entities. What the government can do for a period of time is serve as a guarantor for the 30% - 40% equity required, almost as a “Big Brother” to ensure that a transaction can be completed and the bank is on the hook only for the 60% - 70% loan portion. In addition, banks should retain their role in approving/disapproving transactions which may limit the risk of government-linked players getting a large portion of the deals. In addition, in a similar fashion to Redefine’s spin-off of Arrowhead, or some transactions that have led to listings of funds like Tower Property Fund, the Public Investment Corporation, Transnet or other state-linked enterprises may initiate property listings by off-loading non-core assets to black property entrepreneurs while retaining a significant minority shareholding. Non-black property entrepreneurs have not always had the capital themselves but they have successfully initiated transactions using a

“Big Brother” to give them a “leg up” – this can be replicated in the black community with the help of government. The property sector has gone through a period of rapid innovation, but in the process it has largely remained with poor levels of economic and skills transformation – with the correct policies and implementation strategies, real economic and skills transformation may be the next wave. What the future holds is a new model for BEE, it’s clear that gone are the days when black participants are funded to buy shares and serve as non-executives on boards. If anything, the aforementioned pioneers in Sisa, Izak and Sandile have shown us that BEE cannot be a business model alone, but the fact that one has BEE credentials enhances an already sound model in this competitive environment.  Kundayi Munzara is a fund manager and director at Sesfikile Capital, an investment management house focused on listed property asset management in South Africa and abroad.

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How transformation fosters social stability

elta Property Fund CEO Sandile Nomvete holds a compellingly holistic view about the benefits of transforming the South African property industry. For him the transformation of the property industry is intricately linked to efforts to transform the entire economy in order reduce the yawning economic disparities among citizens – the so-called haves and the have nots –

which is a legacy of the country’s ugly past. Transformation, therefore, is part of a larger project to ensure that everyone has a place in the sun, that everyone thrives and leads meaningful lives. For him such economic transformation is crucial to creating a stable society. If such transformation is not implemented, he warns,

the consequences will be grim. “Transformation – not just in the property sector – is critical in our country. Unless we actively pursue change, we could find ourselves with our very own ‘South African Spring’, where the ‘have nots’ no longer ask to be included in the main stream economy, but agitate for change through an uprising,” says Nomvete. 61

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“It is, therefore, very important for us as a society and a sector to avoid such a scenario. In future, as historically disadvantaged individuals increasingly muscle their way into the mainstream economy, the focus will no longer be on skin colour but on class – the rich versus the poor.

He asserts that any respectable company should have corporate social initiatives as a cornerstone of its empowerment efforts. As for the transformation of the property industry, Nomvete feels

Unless we actively pursue change, we could find ourselves with our very own ‘South African Spring. I believe this would be the greatest challenge for the country. You already see this phenemenon in India, Brazil and a number of other emerging markets.” In essence, Nomvete sees the property industry is inextricably linked to the larger socio-economic issues in South Africa. For him property is an “extremely” important part of any economy, a means for citizens to create a valuable asset base and a catalyst for economic advancement. “Property is a very emotional, very strategic asset that holds a lot of potential,” he says. However, Nomvete feels that most people have a limited understanding of how to leverage their property assets. “How many people with social housing actually have their houses valued and have knowledge to leverage this asset? This illustrates the importance of education, even at this most basic level. “We’re very proud of the fact that we’ve always been able to provide opportunities for black entrepreneurs in our business, throughprocuring services from black small businesses, even in the early days of facilities management when there were only few black suppliers.” 62

strongly that government policy on leases has to be a lot clearer in order to facilitate change. “No one can deny that the likes of Delta would not be around were it not for the policies of government,” he says. “What doesn’t help is the misinterpretation of Treasury’s directive to enter into shorter leases with a 5.5% rental escalation rate per year. Sure, this was a necessary step to clean up the sector, but the confusion it has caused seems to be going against the empowerment ethos. This needs to be addressed,” he says. More than anything, though, Nomvete believes government policy needs to have a bite when it comes to enforcement. “Perhaps government doesn’t appreciate the strategic importance it can play across all sectors. You can’t issue policies and expect the market to regulate itself - continued enforcement of these policies are necessary. Government policy needs teeth,” emphasises Nomvete. As a caveat, Nomvete thinks that clear consequences need to be spelled out if targets of transformation are not met. “For example, historically, the system allowed fully empowered landlords to enter into a nine-year 11-month lease agreement. As

their percentage of empowerment decreased, so would the ‘carrot’ of a longer-term leases. This was a very good policy that worked,” he explains. “But the implementation thereof created a mess. How departments procured goods and services was not necessarily related to the policy. The effect was that traditional landlords were left with month-to-month leases.” For Nomvete, this situation meant that an opportunity to implement signicant transformation of the property sector was lost. As the largest landlord and tenant in the country, government needs to take a leading role in engaging with the sector, he says. “There has been different engagements with various bodies – but the effectiveness of such engagements, the working between government and the private sector should be reviewed as I think more progress can be made. It’s not necessarily a question of political will. There are so many more important issues to worry about.” As an example, Nomvete mentions the issue of qualified audits (from government departments) that needed to be cleaned up. “The same resolve and perseverance should be displayed in achieving the industry targets as well,” he emphasises. “Apart from ownership (which we shouldn’t play down), the downstream opportunities are extremely important. A key point is that one shouldn’t begrudge those who have made it – not all entrepreneurs will make it. The question is how we support those businesses with potential to increase rather than decrease their contribution

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to rightful participation in the property industry,” says Nomvete. The property mogul says banks need to work closely with the DPW, which, in turn, needs to work with local councils. “The system must be streamlined to be more fluid to allow progress. Otherwise, these issues will continue to slow down implementation, which is a big shame,” he says. “This can be done in numerous ways and everyone in the sector should play a role – listed property companies, private developers and landlords, and so on. In property there are different sectors such as residential, warehouse and commercial. Each has its own potential and issues on transformation.” He sees a huge opportunity for large industries to make money through abiding by empowerment efforts. “Despite the obvious low-hanging fruit, we still don’t see the drive from local business to leverage their leases to improve procurement spend. This is a huge opportunity for large industries. If they recognise their rentals as part of BEE procurement spend, it will dramatically change their own empowerment scorecards,” says Nomvete. As a parting shot, Nomvete emphasises the role of entreprenuership in society and the economy. “Entrepreneurs create opportunity,” he says. “There has to be a suitable skills base attracted to these opportunities that in turn support a larger middle class. And given the multiplier effect, that for me is sustainable transformation.” Edited by Phakama Mbonambi and Thabang Mokopanele

Sandile’s journey in the property industry Sandile Nomvete, Chief Executive Officer of JSE-listed Delta Property Fund, was a founder member in 1998 of Motseng that mainly held interests in the provision of soft services, which over time diversified into the industrial, textile manufacturing and property sectors.

for identifying assets in nodes strategic to government. “These assets were often overlooked by other property investors, especially the listed funds, as they were mainly located in the central business districts of Johannesburg, Durban and Pretoria and required a lot of work,” explains Nomvete.

In 2002, the company expanded into the property sector through a joint venture with Mariott Property Services, making it the largest black-owned property management group in South Africa at the time, with approximately R2bn of assets under administration.

These unique attributes of scouting for assets, together with their empowerment status, played a key role in Nomvete’s rise in the property industry, which culminated in the listing of Delta Property Fund on 2 November 2012.

In October 2005, Nomvete and his partners acquired the remaining 50% stake from Marriott. “The industry was anticipating the introduction of a Property Charter and this provided the company with key opportunities and a competitive advantage in terms of business growth as property owners looked to fulfil the charter requirements with regards to affirmative procurement,” says Nomvete. Nomvete and his partners soon realised that they had a skill

Following its listing, Delta continued to be on an aggressive growth path, capitalising on its significant pipeline of government and other assets. “This was at a time when most large property owners were moving out of government lease contracts because of their inadequate empowerment status and the absence of long-term leases. Naturally, this had an impact on the capital expenditure a landlord was willing to spend on the assets, and this provided us with an opportunity,” says Nomvete.

FEATURE

Lost chance to shake up industry

isa Ngebulana, the founder and executive chairman of the Billion Group Limited and the CEO of Rebosis Property Fund, is passionate about property and feels that more could be done to transform the property industry 20 years into the country’s democracy. “The Property Charter by default doesn’t have the same teeth as other charters in other sectors of the economy. For argument’s sake, 64

the Mining Charter acted as a much bigger catalyst for broad-based black economic empowerment (BEE) given the procurement levels it prescribed. As a mining house you had to comply to qualify for new mineral order mining rights. In the property sector, government doesn’t necessarily have this leverage – the Department of Public Works (DPW) is the only mechanism available at a national level to influence transformation. And even there it is limited to the Incubator

Programme applied to a handful of listed funds.” Ngebulana bemoans the consequences of the directive from Treasury, allowing government departments to grant three-year leases at a 5% per annum rental escalations. “This measure was necessary to clean up the audit process, but it has created endless confusion in the market. Effectively, empowered funds who promoted transformation in terms of the Incubator Programme

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are being disadvantaged since the assumption is – incorrectly so – that these funds should also settle on three-year tenures at a 5% escalation! I believe it’s an opportunity lost for transformation,” he asserts. Future for transformation Asked about what the future holds for black property players, and what the industry should be targeting, Ngebulana says the private sector and government can do a lot more to address the slow pace of transformation and empowerment of the previously disadvantaged people. “The recently established Government’s Property Management Trading Entity is one such opportunity, if it is done right. One opportunity is to empower staff that has shown the ability to manage

assets through seed funding. This will nurture the next generation of entrepreneurs.” “Similarly, bigger listed property companies can be real catalysts for empowerment, as is the case in the mining sector. If there was any seriousness about addressing transformation, there would’ve been many more empowered players in property, not just in the listed space. “What concerns me more though is that this option has never been explored by the private sector either. Especially the large property companies are in a much better position to structure their investment through preference shares or a convertible instrument.” Ngebulana pinpoints the chief reason for a lack of transformation in the property sector.

“The problem is that in the overall property sector, there is no regulatory body or ministry that can monitor and enforce the process. This is a major reason for the slow pace and lack of commitment to transformation. The DPW can only enforce policy within the ambit of government-leased properties – and this doesn’t even make up about 10% of the overall sector. “If ownership and transformation was a genuine concern, as it has been in mining, the large corporations would have seized the opportunity to create more entrepreneurs in the sector,” concludes Ngebulana. Beacon of hope Ngebulana is one of the few icons in the property sector, someone who pulled himself by his bootstraps to sit at the top echelons of the property

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industry. It was a long journey. The seeds of success were planted in his childhood. He was born and bred in Mthatha in the Eastern Cape. His grandfather Buchanan Tandi (BT) Ngebulana was a strong leader who played an instrumental role in Sisa’s formative years. Interestingly, Ngebulana Senior represented Eastern Province in rugby and played for the Springboks in the 1940s. “My greatest inspiration is my grandfather. He stands as an icon for the whole family and the broader community where we grew up,” says Ngebulana. He had the privilege of helping, learning and working in the shop and at the brickfields in his formative years, during which time his grandfather mentored him in fundamental business skills. He inherited his grandfather’s strong morals and work ethics. The general dealer became the central point of contact between the villagers and family members working in the cities, who would send money to the village to build their families a home. “We grew up behind the counter,” he remembers. “We had to be up at 4am for bakery deliveries before school. There was hardly time to play. When we had a gap over weekends, we played football. Then people would start streaming into the shop and you ran back to help.” He matriculated at St John’s College in Mthatha, and then attended Fort Hare University in Eastern Cape to study law. He then attended the University of Natal (now UKZN) and enrolled as an estate agent with Realty Elk to finance his studies and living expenses. Ngebulana also 66

started speculating with property and sold properties for cash. He sold about 28 homes and became one of the best local agents in Maritzburg. “I realised early on that the bathroom and kitchen would play a deciding role when families settled on a new home. So I convinced the developer not to finish these rooms, but to rather provide various finishing options as far as tiles, paint and fixtures were concerned,” he says. “This certainly proved useful in the end, as I made enough money to buy a BMW!” Ngebulana then moved to Pinelands, Cape Town, where he completed his articles at Jan S de Villiers law firm between 1992 and 1994. To make ends meet on an articles clerk’s salary, he bought a tow bar and launched a furniture removal business, moving furniture over the weekends in Green Point and Bloubergstrand. After qualifying as a commercial lawyer, Ngebulana moved to Johannesburg and set up a fulltime transport business, Blue Truck Rentals. But the stressful pace of the business took a toll on his health and he decided to accept a position as a legal advisor, specialising in finance and Treasury derivatives and transactions, at Eskom. During his five-year stint at Eskom, Ngebulana was part of the first finance team enabling the euro rand bond issue. He spent 18 months in structured finance and learned the tricks of the trade. The rest is history.  Edited by Phakama Mbonambi and Thabang Mokopanele

Sisa’s journey in the property industry Sisa Ngebulana is the founder and Executive Chairman of the Billion Group Limited and the CEO of Rebosis Property Fund. On listing in 2011, Rebosis was distinguished as the first blackmanaged and substantially black-held property loan stock company to come to the Johannesburg Stock Exchange. Because of its black-owned asset manager, the fund is recognised by the Department of Public Works as being fully empowered. Ngebulana wants to see Rebosis’ market cap at around R10 billion within the next year or two. That strategy is well on track, as Rebosis almost doubled its portfolio in 2,5 years, from R3,4 billion to R6,4 billion for the year ended 31 August 2013 Rebosis has an impressive retail property portfolio, which includes the Hemingways regional mall in East London, one of SA’s top 20 malls, as well as Mdantsane City in East London and Bloed Street Mall in Pretoria. Apart from retail centres, the portfolio consist of strategically located commercial buildings mainly tenanted by government, as well as an industrial premises. Billion has distinguished itself as one of the largest retail developers in South Africa. The company also has a rapidly growing African strategy, and are developing regional shopping centres in Ghana, Nigeria and Angola. Already, 15 dedicated senior staff members are based in various African countries to grow their presence in those markets.

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Amelia focuses on education Skilling of industry players will lead to improved corporate performance, higher GDP growth and more jobs By Phakama Mbonambi

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hen Amelia Beattie was elected president of the South African Property Owners Association (SAPOA) in 2014, she was never in doubt about what the focus of her presidency should be in supporting efforts to transform the industry. “One of the things I promised to focus on was education because it is at the heart of transformation,” says Beattie. “Our industry needs skills. When I became president I undertook to do a skills analysis and determine where the gaps are. We are busy finalising this and we’ll then engage business, government and other stakeholders to raise funds for such up-skilling.” Beattie is “passionate” about education and skills development and believes that, in general, property is a powerful instrument to change people’s lives. She stresses that education has always been important to SAPOA but, this time, she “just wanted to take it up one notch so we can truly skill our people in the industry. This will lead to improved performance of companies with property portfolios, and that would result in increased Gross Domestic Product and creation of more jobs.” Beattie says a sharper focus on education is meant to not only benefit new entrants but also industry veterans. “It’s important to involve everyone,” she says. While each president may have a specific area of focus, continuity is crucial. “It’s important to not summarily drop the previous president’s issues. The themes we choose are all within the strategy of SAPOA,” she says. Beattie, who holds a BComm degree in Financial Accounting and Transport economics, as well as a Certificate in Shopping Centre

Management, has been in the property industry sector for 15 years. Her day job is Chief Investment Officer – Direct Property Investments at Stanlib, where she oversees the asset management of the Liberty Property Portfolio and the STANLIB Africa Direct Property Development Fund. Formed in 1966, SAPOA upholds the commercial and industrial interests of its members in terms of ownership, management and development. SAPOA has a national footprint and encourages members to play an active role within the organisation by sharing their expertise and, importantly, airing their views around issues of change, decisions and legislation. Through collecting data and statistics, SAPOA is a source of invaluable information about the property industry in South Africa. The organisation’s members control about 90% of all commercial and industrial property in South Africa. Beattie is the 48th president of SAPOA and a third woman to hold

against biting municipal rates that affect the property industry or calling for ministerial intervention in the processing of damaging logjams in the property development sector. In the end, Beattie says, such activism is not obstructionist or personal. It is something that needs to be done to serve the interest of the property industry. As president of a powerful property organisation does she enjoy ruffling feathers? “Leadership is all about the courage of your convictions,” she says. “Sometimes you will say

In the end, nothing beats collaboration and listening to one another. the position. While she’ll serve only for a year she’s confident that she can leave a mark. “You can do a lot in a year,” she says. “The data we’ll gather will be helpful even to future presidents.” In addition to education, when she was elected SAPOA president, she also promised to focus on relationships, advocacy and leadership. In fulfilling its mandate SAPOA can be quite vocal, whether it’s protesting

things that some people don’t like to hear. This kind of advocacy needs to be done with integrity and with no malice. We act in the best interest of the industry,” she says. “In the end, nothing beats collaboration and listening to one another.” Beattie says SAPOA supports SAIBPP’s mission of transformation. “We have always had good relations with SAIBPP. Their members also belong to SAPOA. We collaborate on projects that have outcomes that are beneficial to everyone,” she says. 

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We’ve always understood the need for empowerment By Norbert Sasse

rowthpoint’s board and management have always appreciated and understood the need for transformation and empowerment. While founded in 1987, Growthpoint only really became an active, growing company from about 2001, when still part of Investec, and well after the end of apartheid and dawn of democracy in South Africa. So, we’ve always operated in a South Africa where achieving meaningful participation by historically disadvantaged South Africans in our economy is a business imperative.

Putting this understanding into action, Growthpoint was certainly one of the very first listed property companies to execute an empowerment transaction. We introduced our first BEE partners in an unprecedented fully-funded R1bn deal in 2005, the largest empowerment of its kind in the property sector at the time. The BEE consortium comprised the broad-based empowerment companies: Amabubesi Investments, Miganu Investment Holdings, and Unipalm Investment Holdings, each 69

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We are committed to going along the road of transformation and actively furthering empowerment in the property sector with a far-reaching and broadbased BEE programme. of which owned one third interest in the BEE Consortium which held its interest in Growthpoint via AMU Trust. Each of the groupings were required to include a broad base of shareholders in their respective consortiums. The trust acquired around 14% of the total Growthpoint linked units in issue at the time, with a unique mezzanine funding structure especially designed for the deal. As part of the transaction, the BEE consortium also acquired a 14% interest in the Growthpoint management contract, which was sold to them by Investec Property Group Limited. Our new BEE partners added valuable strategic input for Growthpoint and made positive contribution at shareholder and board level. Key role-players and shareholders in Amabubesi included Bulelani Ngcuka, Sango Ntsaluba, Thabiso Tlelai and Peter Moyo while Miganu Chairman, Mzolisi Diliza and Dr Penuell Maduna were the key representatives of Miganu. Cape-based entrepreneur Ragavan Moonsamy and Lazarus Zim were the largest shareholders in Unipalm. Mzolisi Diliza, the representative for Miganu, was already a director of 70

Growthpoint, thanks to our earlier Mines Pension Fund transaction, and two further representatives of the AMU Trust, including Ragi Moonsamy were also appointed to Growthpoint’s board. Diliza participated in the original BEE commission chaired by Cyril Ramaphosa, which was set up to deal with the economic transformation of South African business. As CEO of the Chamber of Mines and with his mining background, Diliza also participated in the mining charter, the first charter to be gazetted into law, even beating the DTI to the finishing line. Diliza has been, and remains, a champion of transformation at Growthpoint as chairman of our dedicated Transformation Committee.

specially created mezzanine funding. As an integral part of the transaction, Phatsima also acquired a 2.3% interest in the Growthpoint asset management contract from Investec Property Group.

Shortly after that initial BEE transaction in 2005, we completed a second transaction in 2006, with black-controlled and management property investment holding company Phatsima Properties led by Herman Mashaba. This transaction followed Growthpoint’s takeover of Metboard, with Mashaba being the chosen empowerment partner for Meboard and a director at the time. Phatsima Properties acquired 2.3% of Growthpoint’s units in issue, which then had a market value of R280 million, also fully funded with

The implementation of both BEE transactions were major steps towards ensuring that Growthpoint’s BEE equity ownership and control responsibilities were addressed, in terms of the DTI Codes of Good Practice on Broad Based Black Economic Empowerment.

Mashaba, who held a 40% indirect beneficial interest in Phatsima, was a non-executive director of Growthpoint and continued to represent Phatsima in this position. Today, he is Deputy Chairman of Growthpoint. Other key roleplayers and shareholders in Phatsima included the ABM Kalla Family Investment, Selomane Maitisa, The Field Band Foundation, Jacqueline Mafumadi, Tim Modise and Joyce Dube.

The transactions introduced BEE partners represented by influential role players who have added value to Growthpoint and its shareholders and simultaneously benefitted historically disadvantaged South Africans. By

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By the end of 2006, collectively our transactions placed about 17% of the shares of the company in black hands. the end of 2006, collectively our transactions placed about 17% of the shares of the company in black hands. In February 2007, the DTI gazetted the Black Economic Empowerment (BEE) Codes of Good Practice, and the sector was drafting a Property Sector Transformation Charter. At the same time Growthpoint sought to lead the market through early adoption of the principles in the Property Sector Charter by focusing on each of the elements contained in the charter, but in particular through enterprise development. In early 2008, Growthpoint launched the Property Point with the aim boost small business serving South Africa’s listed property sector by giving them a toehold in a highly competitive marketplace. The Property Point is all about training and supporting entrepreneurs to develop their enterprises into fully independent companies that are able to compete effectively in the open marketplace. As a hands-on property owner – we own and manage our buildings – we recognised our unique position to sponsor selected micro and small businesses through skills training and personal development, and then

support them by ensuring tendering opportunities within Growthpoint and its service-providers. Property Point was the only enterprise development project of this kind in the listed property sector at the time, and it still stands out among the sector’s innovative initiatives by offering a range of entrepreneurial opportunities for small business.

listed property sector’s B-BBEE for over four years, achieving a Level Two BEE rating in 2010 based on our commitment to the seven pillars of the Property Charter scorecard: ownership, control, employment equity, preferential procurement, skills development, social responsibility and enterprise development.

Six years later, Property Point has had significant impact. To date, 904 full-time equivalent jobs have been created by its beneficiary companies and R217,8m worth of market linkages have been facilitated for the 86 SMEs that have been on the programme. Some 1 730 entrepreneurs have attended its “To The Point” training and information sessions.

As the largest listed property company in South Africa, this was no simple task. Our BEE programme had to be far-reaching and broad based, and serve to benefit a considerable number of previously disadvantaged individuals.

It has also helped to diversify our supply chain and supported our procurement from black suppliers. Today, our preferential procurement score is 16.9 out of 20 on total procurement spend – which amounts to around R2,2bn towards BBBEE compliant suppliers. This achievement has taken a massive and active effort by Growthpoint. Our transformation initiatives resulted in Growthpoint leading the

Growthpoint remained at the forefront of transformation in the sector until the welcome emergence of funds like Dipula, Rebosis, Delta and Ascension in the sector. Notwithstanding our continued enthusiastic support for transformation, given the nature of our business model as a REIT– we distribute all our earnings, which requires us to continually issue new shares to raise capital to achieve growth – the aggressive growth of our company, and the changes to the DTI codes, remaining meaningfully empowered at ownership level is a 71

massive challenge. As new shares are issued, we cannot force our shareholders to follow their rights, thus black ownership is highly susceptible to dilution. Even with this challenge, Growthpoint strives to play an important role in the transformation of society, including economic and social change. This is evident both in terms of our strategic external partners and on an operations level. We place a high importance on nurturing relationships that further transformation and BEE, and we are still attracting new black investors. In August this year, Southern Palace Properties, a wholly owned subsidiary of black-owned and managed diversified industrial holding company Southern Palace Group, acquired a 7.95% stake in Growthpoint. It was acquired from the Government Employees Pension Fund (GEPF) through its asset manager, the Public Investment Corporation (PIC). The transaction makes Southern Palace the largest non-institutional shareholder in Growthpoint and the largest shareholder after the GEPF, which still has a 10.96% shareholding in Growthpoint. Growthpoint specifically, and REITs in general, have an important role to play in bringing the benefits of property ownership to more South Africans. Historically, property ownership is not part of black culture stemming from the former Group Areas Act where black people were told where they could live and prohibited from owning property. To successfully overcome this legacy both individual and collective efforts are required. SA REITs have a key 72

role to play in providing affordable access to property ownership and to the savings of South Africans. Where property ownership still remains out of the financial reach of many South Africans today, REITs are a uniquely affordable and liquid way to access the benefits of property ownership. For Growthpoint, transformation remains a key performance area and will continue to focus on all aspects of the Property Charter with our transformation initiatives. Growthpoint’s commitment to transformation is also supported by our education and social infrastructure initiatives which make up our corporate social responsibility. From our Growsmart literacy programme, which has supported the work of 302 schools in the Western Cape, reaching some 70 000 learners, to our support of the Thandulwazi Maths and Science Academy, we help to create platforms for access to good quality education and support a future generation of educated, skilled leaders. Our R410 000 bursary programme supports learners at tertiary level, a portion of which is contributed directly to the South African Property Owners Association (SAPOA), which is allocated to deserving underprivileged students. As our core business is to develop, invest and manage a diverse portfolio of property, we are intensely aware that by creating property assets for communities, we provide a platform and opportunities that go beyond the value of the asset alone. So far, we have contributed R11,7m towards the development of community, youth and skills centres, completing one each year since 2011, in areas like Diepsloot.

Growthpoint entered the second half of 2014 with representivity of 48.4% in accordance with BBBEE reporting of the Property Sector Transformation Charter. This headway achieved by Growthpoint is even more remarkable if you consider that Growthpoint didn’t have a single staff member prior to June 2007 when it acquired its property asset management and property administration businesses of Investec Property Group, adopting an internal management structure. We continue our efforts to employ more people from previously disadvantaged groups, as well as improve gender representivity, especially in our core skills areas and our senior management. Growthpoint has created an enabling environment for designated groups to achieve using both recruitment and organic growth – through skills training and development and succession planning – to achieve its employment equity targets. Through our BEE and other transformation initiatives, we learnt many important lessons. Transformation is a journey. We are committed to going along the road of transformation and actively furthering empowerment in the property sector with a far-reaching and broad-based BEE programme. Growthpoint will remain an active participant in South Africa’s economic transformation.  Norbert Sasse is Chief Executive Officer for Growthpoint Properties Limited.