Commercial Guidebook | Real Estate Investor Magazine Commercial Handbook 2013 | Page 36

LISTED BY MORNE REINDEERS Building A Listed Property Fund Get the know-how now 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. 34 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. www.reimag.co.za