“Tower was launched last year November when we put together an unlisted fund and we’ve brought it to market this morning. It’s a 1.65 billion rand portfolio. We’re the first REIT to list at a forward yield of 9 per cent and we bring a mixture of properties to the market from commercial and retail,” Tower Property Fund CEO Marc Edwards told CNBC Africa on Friday.
The Real Estate Investments Trusts (REIT) structure is a proposed tax structure that could see investors pocketing more dividends and earnings. The fund will be launched by the Spire Property Group and partners, with a portfolio that consists of 27 properties.
According to Edwards, the REIT structure is quite favourable in terms of aligning it with developers, who will put their property into the funding exchange for paper.
“We’re about 70 per cent office, we’d like to reduce that office exposure to around 30 per cent and bring our retail up to 50 per cent. Most of the pipeline is retail and Cape and Johannesburg-based, with one new property coming in KwaZulu-Natal,” Edwards explained.
“Our strategy is to look at properties between 50 and 200 million rand until we reach three and a half billion rand in size, which we have to do as soon as possible.”
Despite their shareholder base being raised in a volatile period, the Tower Property Fund has been supported by large institutions such as Stanlib and smaller asset managers such as Grindrod President and Boe Stockbrokers.
The new REIT structure is expected to improve efficiency and streamlining in the South African property market.
“From our point of view, it makes the overseas and local investors see the transparency of the fund a lot easier from a tax perspective and so we really believe it will add value to the entire property sector. I think some big listings are going to come as a result of the REIT structure.”