By Khulekani Magubane for Fin24

The Public Investment Corporation, which manages civil servant pensions, plans to sell 70 properties – including shopping malls and commercial buildings.

First on the chopping block are Edcon’s former training campus and two shopping centres in Cape Town and Durban.

The proceeds of the sales will be invested in other opportunities, the PIC said.

The Public Investment Corporation wants to sell 70 properties – including malls and office buildings – in the coming months.

The properties are currently held in the Government Employee Pension Fund’s portfolio, and the PIC, which manages civil servant pensions, has formed a joined venture with real estate firms to dispose of the buildings.

The state-owned asset manager – which has over R1.9 trillion in assets under management – says it is seeking to “optimise” the GEPF’s property portfolio.

But this may not be the best time in recent years to sell South African commercial and retail properties, which have been ravaged by Covid-19. Many landlords are struggling to contain an exodus of tenants as the pandemic kept shoppers out of malls, while the work-from-home trend continues to depress the demand for offices.

The PIC wants to sell the properties in two tranches. The first group of 25 retail, industrial and student housing buildings will go on sale first, while a second tranche of 45 properties, which are mostly commercial and specialised, are due to be released in July. The properties also include schools and data centres.

Edcon’s former training campus with hotel and conference facilities in Ormonde, Johannesburg, as well as a tenanted industrial unit in Lyttelton Manor Pretoria, the Palm Grove Shopping Centre in Durbanville, Cape Town and the Village Market Shopping Centre in Westville, Durban will be part of the first tranche.

The disposal of the properties will be brokered by Jones Lang LaSalle (JLL), the large UK-owned real estate firm, and the Empact Group, which is wholly owned by Thebe Investment Corporation. This is the first time that the PIC has appointed commercial agents to broker the sale of GEPF properties. The companies were appointed through a tender process.

“In order to give confidence to investors participating in the sales process, we have appointed a commercial property JV to oversee the sale of a portion of the portfolio. Our appointed agents will manage the entire process from marketing to deal closure. We specifically wanted to make this an external process to give the market confidence in the sales,” said PIC CEO Abel Sithole.

He said the proceeds of the sales will be invested into other investment opportunities.

The PIC is also on an ongoing mission to restore its credibility after a string of investments it made in the past decade went awry, including in Ayo Technologies and Steinhoff. The governance of the asset manager was subject to a commission of inquiry chaired by Justice Lex Mpati.

 

By Edward West for IOL

Attacq, the real estate investment trust (Reit) that holds Mall of Africa and Waterfall City among its assets, said the easing of lockdown restrictions from March 1, 2021 had resulted in a marked improvement in trading density growth at its retail centres.

All its tenants were able to trade with minimal restrictions, the group said yesterday in an update of its retail portfolio’s trading performance, and progress made to improve its capital structure.

At Mall of Africa, trading density improved 33 percent versus March 2020, compared with a 0.8 percent decline recorded in February over the same month a year before, and a 14.1 percent decline in January on the same basis.

Brooklyn Mall saw trading density up 7 percent on the same basis, compared with a 17 percent decline in February and a 14.1 percent decline in January.

Eikestad Mall saw trading density up 12.7 percent in March, versus a 24.5 percent decline in February and a 30.6 percent decline in January.

Attacq’s operations for the first six months of the 2021 financial year had been significantly impacted by the Covid-19 pandemic’s second wave of infections and further national lockdown restrictions.

Post-December 31, Attacq settled 35.8 million euro of euro debt from proceeds of the disposal of MAS Real Estate shares, significantly de-risking foreign exchange risk.

Assuming the debt repayment took place on July 1, 2020, Attacq’s gearing ratio at December 31, 2020 would have improved to 44.1 percent from 46.3 percent.

Attacq had also started refinancing its R3.3 billion syndicated loan secured by the portfolios of its subsidiaries, Attacq Retail Fund Proprietary and Lynnwood Bridge Office Park, R2.9bn of which matures during the 2022 calendar year.

The refinance was expected to be implemented by June 30, 2021, while the balance of the loan of R300m was expected to be repaid with proceeds from the sale of assets.

Attacq’s share price increased 1.1 percent to R7.38 on the JSE yesterday afternoon. It was trading at R5.12 at the same day last year.

The share closed 1.37 percent higher at R7.40 on the JSE yesterday.

RMB concerned over rising food costs

By Marleny Arnoldi for Creamer Media

Rand Merchant Bank (RMB) says rapidly rising agricultural producer price inflation poses a conundrum for food manufacturers about whether to absorb these cost increases or pass them on to already financially constrained consumers.

The bank’s commentary follows figures released in the Producer Price Inflation for March, which showed that agricultural producer price inflation accelerated to 12.3% year-on-year in November 2020, before settling at a still high 7.2% in March.

RMB consumer, food and agrisector head John van Tubbergh says many of the large food manufacturers have cited soaring prices of key agricultural products as a real threat to margins.

“Digging deeper into the constituents of this figure, the inflation rates for cereals and other crops, as well as dairy products are 17.2% and 12.6%, respectively. Producer price inflation for live animals and animal products is 9.8%,” explains Van Tubbergh.

Combined cereals, dairy and animal products make up nearly 60% of the agricultural producer price basket.

Price pressures at the agricultural level are also beginning to drive manufacturing costs up.

From subdued levels of around 4% last year, manufactured producer food price inflation has quickened from 6.9% year-on-year in February to 8.1% in March. This rate now well exceeds Consumer Price Index food price inflation, which means gross margins of food manufacturers are getting squeezed.

“Amid a still weak economy with households financially under strain this leaves food manufacturers with some difficult decisions to make,” Van Tubbergh notes.

He adds that food manufacturers have already responded by cutting internal costs and optimising processes to help reduce the pressure on margins. For example, RMB is being requested to hedge against cost increases resulting from soaring agricultural commodity prices.

Work-from-home dynamics have given food manufacturers some wiggle room, RMB chief economist Ettiene le Roux puts forward.

“Owing to Covid-19 and lockdown restrictions, many consumers are staying at home and consuming more basic groceries. Taking advantage of this increased demand food manufacturers have been able to raise selling prices.

“But even so, it will be difficult for them to continue hiking prices as much as they would like,” he says.

RMB is convinced that South African consumers face many headwinds, including high fuel prices and increased municipal rates and taxes and this at a time when salary increases are scarce and pay cuts abundant.

“Consumers will, therefore, be very sensitive to any further sharp price increases, a dynamic food manufacturers no doubt would be aware of in today’s ever more competitive corporate landscape,” Le Roux laments. 

Bidvest sells off travel portfolio

By Sandile Mchunu for IOL

The Bidvest Group has signed an agreement with National Aviation Services (NAS), Colossal Africa and a consortium consisting of the current executive team to acquire its business BidAir Services for an undisclosed amount.

BidAir is the country’s largest ground handling company and its acquisition is subject to regulatory approvals, as well as permission from the Airports Company of South Africa (Acsa), which manages South African airports.

NAS chief executive Hassan El-Houry said NAS prides itself on its global expertise and local knowledge.

“We believe that the success of the aviation industry in Africa is tied to its economic prosperity and have made significant investments into the industry across the continent.

“We look forward to adding BidAir Services, the largest South African ground handling company to our expanding network.”

BidAir provides quality-handling services, including passenger and ramp handling, load control and operations, cleaning, toilet and water services, among others at nine South African airports.

Bidvest took a decision to divest from BidAir and Bidvest Car Rental following a detailed strategic review of all its businesses and the group wanted to sell the businesses to preserve as many jobs as possible.

In the year to end June 2020, the group said BidAir lounges was on track for a record performance but was curtailed in the pandemic-affected fourth quarter and reported a loss during the year.

BidAir has a clientele of more than 28 major airlines including international carriers such as Emirates, Etihad Airways, British Airways, Qatar Airways, Singapore Airlines, Air France, Ethiopian Airlines and RwandAir.

NAS and Colossal Africa said they are committed to investing into the development of facilities and infrastructure, latest equipment, technology, recruitment and training.

Colossal Africa director Cingashe Motale said as a 100 percent black women-owned investment holdings company their strategy focuses on the development of local capabilities while building a globally competitive company through strategic acquisitions and partnerships in their chosen sectors.

“This transaction involves all the elements that form part of that strategy and working with a partner of such calibre as NAS puts us on a path that fits all the pieces together,” Motale said. The current executive management team of BidAir will also ensure that there is a smooth transition to the new owners with no disruption.

NAS said following the acquisition it will focus on training to develop the knowledge and skills of local South African youth while offering more employment opportunities and career options with an emphasis on employment equity.

“One of the key offerings will also include the integration of IT and healthcare to support civil aviation and government authorities during emergencies such as the current Covid19 pandemic,” NAS said.

 

Bankrupt Post Office wants to stop couriers

By Hanno Labuschagne for MyBroadband

Items like smartphones, small electronics, bank cards, and medication may soon only be delivered through the Post Office.

This is if it wins its court face-off with PostNet and the South African Express Parcel Association (SAEPA) over the delivery of packages weighing 1kg and less.

ICASA’s Complaints and Compliance Commission (CCC) in late 2019 ruled that PostNet had contravened the Postal Services Act by transporting and delivering such packages.

According to the regulations, only a licensed postal services operator may render services defined as “reserved postal services.”

As the only operator of this kind in South Africa, the Post Office has the exclusive right to provide delivery services for all letters, postcards, printed matter, small parcels, and other postal articles up to and including 1kg.

PostNet was initially ordered to stop delivering all packages weighing 1kg and less by 17 March 2020.

However, it secured an interdict which has allowed it to continue to deliver these packages until the full challenge is heard in the Gauteng High Court.

It has been joined by SAEPA, who represents courier companies like FedEx, DHL, UPS, CourierIT, RAM, and Globeflight.

The organisation has told MyBroadband that the impact could be disastrous if the court ruled in the Post Office’s favour.

Shopping delivery storage

Individual South African customers and online shopping companies rely on private couriers to deliver many products to their homes on time and with efficiency.

The SA Post Office’s services, by contrast, have been in a decline over the last few years, with packages often reported as lost or stolen.

In addition, the majority of its offering only delivers to branches and not directly to the customer’s home.

SAEPA CEO Garry Marshall said that many of the products currently carried by private couriers fell into the sub-1kg category which the Post Office is laying claim to.

“It just covers such a broad range of commodities across the board,” Marshall said.

“The most dramatic that people can relate to are medications, cell phones, and electronic equipment.”

He provided the example of someone working from home who would need to order a small router.

If the Post Office wins the case, a customer would need to have it shipped through them.

If they opt not to use the Speed Services door-to-door option, they would have to pick it up at the Post Office.

Takealot delivery

More worryingly is that many people won’t be able to use other couriers to get their prescribed medication delivered.

“The courier industry delivers hundreds of thousands of chronic medication shipments directly to people’s homes per month,” Marshall said.

“If those are under 1kg – as many of them are – then of course that would be impacted by it.”

When asked about the specific items which would be reserved to its services, the Post Office simply said that “all items below 1kg” formed part of its mandate.

“Exceptions are the items listed on SAPO’s prohibited guide, for example dangerous goods such as gunpowder,” it added.

Sub-1kg products which are often transported and delivered by courier services include:

  • Bank cards
  • Important financial and legal documents
  • Vehicle licences
  • Electronics like smartphones, wearables, routers, and dongles
  • Computer components
  • SIM cards
  • Clothing
  • Medicine
  • Fast food
  • Car parts
  • rain new logo SIM

Many MyBroadband readers have suggested that courier companies could bypass the regulations by simply adding more weight to small packages to push them over the 1kg mark.

Marshall said, however, that they could not realistically consider this.

“You can’t do that as a rule,” he stated.

“We have to be compliant with the law and anything that artificially inflates things to circumvent the law makes it very difficult for us to perform.”

“New legislation will simply come in that will say that you can’t artificially inflate the weight of something,” Marshall said.

 

Mango may be grounded this week

By Sifiso Zulu for EWN

State-owned airline Mango is still waiting to hear from the Department of Public Enterprises about exactly when it will receive a cash injection amid concerns that salaries may not be paid.

The airline said it would be able to communicate on Tuesday about what lay ahead while there were reports that it would soon go into business rescue.

About 700 employees at Mango stand to be affected by whichever decision is reached.

Government has delayed much-needed funding for Mango, promising on a number of occasions that money would be paid over.

Aviation experts say the horse had already bolted at Mango and it would take immediate cashflow to make up for the financial losses.

Aviation economist Joachim Vermooten said Mango was already faced with financial problems, which were made worse by the COVID-19 pandemic.

“You can’t maintain these kinds of operations. You really need to restructure and take it down to whatever you can learn.”

“Mango still has an important role in the aviation industry, particularly to provide SAA with what we call domestic connectivity,” said aviation expert Guy Leech.

Meanwhile, trade union Numsa said the department was to blame for the financial challenges at Mango.

By Edwin Ntshidi for EWN

Talks between public sector unions and government have deadlocked.

This comes after marathon talks between state negotiators and the Public Servants Association (PSA).

The association, one of the largest parties at the Public Service Coordinating Bargaining Council, tabled a wage demand of over 7% – with government saying it cannot afford the demand.

Government proposed a 0% increase but has been willing to talk.

The PSA and government negotiators met until late last night in an attempt to avert a strike that could see over 200,000 government workers downing tools.

However, the parties could not find each other as the association’s Ruben Maleka elaborates.

“It is regrettable that last night we could not find each other with the employer. The employer would not revise its offer of 0%.”

Wage negotiations stalled after the government did not accede to public servants’ wage demand of CPI plus 4%.

Instead, the government said the demands are out of sync with the Fiscal Framework.

With talks now deadlocked, this paves a way for unions to declare a dispute.

Should the strike go ahead, it will result in public servants in the public sector embarking on industrial action while the country faces the COVID-19 health crisis.

What will happen next?

  • Unions are finalising declaring a dispute after the deadlock
  • Then the matter will be conciliated
  • Should that fail, unions can apply for a strike certificate

Earlier in the week, Public Service and Public Administration Minister Senzo Mchunu described this year’s wage talks as “the most difficult negotiations” the country has ever faced.

He urged government and labour representatives to put the public service first and not treat each other as adversaries.

The bad state of the economy, the COVID-19 pandemic and the need for drastic changes in the public service are just some of the reasons Mchunu listed as factors that have made this year’s talks the most difficult.

National Treasury aims to cut about R300 billion from the public wage bill in the next three years as it becomes ever more apparent that government cannot afford to foot the bill as the pressure on the fiscus increases.

However, trade unions are equally under pressure to appease their members who have gone without wage adjustments in the past year.

 

Source: MyBroadband

With many people working from home due to the COVID-19 pandemic, businesses have turned to remote monitoring software – also called tattleware – to get insights into worker productivity.

Typically, these programs allow companies to get an analysis of the time users spend on certain online tasks.

This is then compared with with other staff members who have the same work responsibilities.

In addition, certain programs can track inputs on the keyboard, movements of the mouse, take screenshots of a user’s computer, and even be used to read social media messages.

According to estimates from research firm Gartner, around 80% of companies worldwide have introduced a form of remote monitoring software on their employees’ computers.

Cliffe Dekker Hofmeyr director of employee practice Phetheni Nkuna told City Press that the influx of tattleware has been particularly noticeable in the US – but it will likely spill over to South Africa.

Nkuna warned businesses they would have to ensure they did not infringe on employee privacy when using this software.

“In South Africa, no law is absolute – there are limits. It will be interesting to see how the courts handle such cases,” Nkuna said.

Only 4% want to return to the office
The impact of the switch to remote working as a COVID-19 safety measure is likely to remain long after the pandemic has passed, particularly in South Africa.

According to a recent study from Boston Consulting Group (BCG), The Network, and CareerJunction, only 4% of South Africans want to work completely on-site at an office after the pandemic.

Over 53% of South African respondents said they would prefer a job which permitted them to work from home on occasion, while 44% said they wanted to work fully remotely.

“Workers and managers alike have seen that flexible work models are possible, and in fact desirable,” said BCG Johannesburg principal and recruiting director Rudi van Blerk

Absa CEO resigns after less than 18 months

By Dieketseng Maleke for IOL

Banking group Absa’s chief executive is set to step down after just 16 months in the position. The bank subsequently confirmed the news in a SENS announcement.

On Tuesday, BDLive reported that Daniel Mminele was leaving due to differences with executives over the strategic direction of the country’s third-biggest banking group by assets.

According to the publication, people who were familiar with the matter said: “Mminele and Absa had agreed to part ways due to differences with some members of his executive team over changes to the bank’s strategy, which was largely in place when he joined.

“Subsequent discussions with the board failed to resolve the issues leading to the eventual decision to part ways, the people said.”

Attempts to reach Absa for comment were unsuccessful.

 

Plans to extend Home Affairs working hours

Source: eNCA

Home Affairs is hoping to extend its working hours into the weekend in order to deal with backlogs.

Home Affairs Minister Aaron Motsoaledi says negotiations are continuing with worker unions to create weekend shifts.

Strides have been made, but the department is still plagued by snaking queues, frequent server problems, disinterested staff and corruption.

Currently, Home Affairs offices close at 3.30pm and are not open on weekends.

The minister wants to change that.

“That’s what we want to do, a shift system that the people who come to work on the weekends must not work during the week, for instance,” Motsoaledi said.

“We’re still negotiating with the unions.”

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