Real Estate Investor Magazine South Africa November 2019 | Page 18

COVER STORY
Mill Junction is a low
cost and energy-
efficient student
residence from
Citiq Students -
manufactured using
pre-existing silos
and containers.
Tax Incentives
According to South Africa’s largest S12J manager, Westbrooke
Alternative Asset Management (WAAM), Section 12J is an
investment tax incentive designed to encourage investment
into a range of private companies in accordance with defined
criteria. The incentive gives taxpayers the ability to write off
100% of their investment against their taxable income.
WAAM looks after over half of the capital invested in
S12J funds today and focuses on risk mitigation and capital
preservation through asset-backed 12J investment strategies,
aiming to deliver returns uncorrelated to traditional investment
markets. This asset manager was founded in 2012 with R3,5
billion of 3rd party investor funds under management. They
are now a multi-asset, multi-strategy manager of investment
funds and products.
They invest on behalf of their clients, partners, management
and shareholders across the spectrum of private equity, listed
equity, real estate and credit. The investment opportunities
include private equity using the 12J tax vehicle, private debt
with access to liquidity, listed equity, USA residential real estate
investments in family apartments.
WAAM is South Africa’s largest 12J fund manager of student
accommodation real estate investments.12J investments offer a
100% tax deduction over a 5-year period with attractive returns.
Commercial Funding
The National Housing Finance Corporation (NHFC) is one of
several Development Finance Institutions (DFIs) created by
the South African Government to sustainably improve on
the socio-economic challenges of the country. The NHFC
is structured to drive activities that demonstrate workable
models for affordable housing finance and developments in
the Gap market. The NHFC does not provide direct housing
finance to end-beneficiaries (home-seekers), but rather enters
into partnerships with the following entities:
Social Housing Institutions (SHI’s)
Property Practitioners (Developers/Landlords)
Private Lenders/Retail Finance Intermediaries (RFI’s)/Banks
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NOVEMBER/DECEMBER 2019 SA Real Estate Investor Magazine
“Within the student
accommodation sector in
South Africa there are vast
investment opportunities for real
estate investors. This became
apparent at the annual Student
Accommodation Investment
Summit held recently in
Johannesburg.”
Providing access to finance for people with passion,
potential and integrity to purchase, convert or refurbish
buildings in the inner cities of South Africa, TUHF’s commercial
property development and funding division provides funding
opportunities to aspiring real estate investors. Their hands-on
approach and specialised knowledge of the complexities of
inner cities enables them to empower their clients to catalyse
the regeneration of surrounding neighbourhoods and
communities.
An investor in the Student Accommodation sector,
Goodson Capital Partners, believes that there is an investment
case for REIT’s, where they look at acquiring existing student
accommodation assets, construction of accommodation
with attractive returns and achievable exit strategies. The
opportunities are in SA and rest of Africa specifically with an 8 –
10% per annum escalation and purchase yield of around 10%.
The trick is to find dormitory style, well maintained, clean,
safe and affordable accommodation within a proximity of a
4 km radius to universities and colleges that include access
to public transport. The best investments always include the
following facilities: bed and mattress, desk and chair, bookshelf,
lockers and cupboards, laundry facilities, study and recreational
rooms, and free wi-fi. Security is a pivotal consideration with
biometric access, cameras and house rules.