LISTED
BY MORNE REINDEERS
Building A Listed Property Fund
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D
riven by an historic low interest rate
environment, the listed property sector
experienced a boom in recent years,
outperforming other listed securities on the JSE by some
margin. This is because investors continuously search for
above-average yield and relatively low risk, and listed
property offers such an investment opportunity.
Investor demand has created a favourable
environment for property companies to come to
market, and it therefore is no surprise that this has
been the most active sector for new listings on the JSE
over the past two years.
With a plethora of listed property companies to
choose from, investors have to consider the focus of
the property fund, management’s experience and
expertise in building a fund in a listed environment
and how listed property funds can ensure they
remain competitive and profitable in an increasingly
demanding environment.
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Commercial Handbook 2013
“We have definitely noticed a trend where assets
coming to market are either fully or overpriced,”
says Rob Kane, Chief Executive of Vunani Property
Investment Fund (VPIF).
“There is currently a high demand for quality assets,
and funding is relatively cheap, given the low interest
rates. This means that some buyers are willing to pay
more than they ordinarily would, especially if there are
a number of bidders,” he explains.
Given the above context, how does one then
build a property fund?
“I think management focus, discipline and experience
is crucial,” says Kane. “You have to be prepared to walk
away from a deal if it doesn’t make financial sense.” He
points out that there are a number of listed property
funds with a specific sector focus, which creates greater
opportunities for value creation and growth. VPIF, for
example, specialises in the commercial office sector and
focuses on A and B+ grade buildings.
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