Resilient plans fund for rural centres

Posted On Thursday, 23 June 2005 02:00 Published by eProp Commercial Property News
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Resilient Property Income Fund is planning to put together another listed property fund with exposure to retail properties in rural areas and parts of Africa.

Des de Beer ResilientListed property loan stock company Resilient Property Income Fund is planning to put together another listed property fund with exposure to retail properties in rural areas and parts of Africa.

There has been little activity in terms of new property listings on the JSE Securities Exchange SA and the new offering should be welcomed by the market.

Resilient MD Des de Beer says the reasons for planning a separate small listing include the fact that Resilient is "very conservatively structured" with a focus on large shopping centres of more than 20000m² in non-metropolitan areas. "We don’t want to change the focus because the market wouldn’t like that. The Resilient fund focus will also leave us with strong growth for the future," says De Beer.

But he says they see some "special opportunities", particularly in rural areas where the provision of social grants has resulted in significant disposable income. "We want to take advantage of this trend (with the new fund)," he says.

De Beer says the new separate listing, called Diversified Property Fund, would focus on smaller centres — between 5000m² and 10000m² — in rural areas.

He says the new fund will have to take development risk, something which the Resilient board would not be happy to do, because there are no centres like this in the deep rural areas. But De Beer says the Diversified Property Fund, which will be promoted by Resilient, will not be involved in the high-risk trade of properties, just the development of its own property stock.

As part of that strategy Diversified Property Fund will also go into other parts of Africa where it can earn dollar-based income. De Beer says they are particularly interested in Zambia and Botswana at this stage.

"We will generally avoid countries with political risk, ownership and/or title deed constraints such as Mozambique, as well as exchange control problems."

De Beer says they hope to list Diversified Property Fund on the JSE before the end of the year. The fund will have a market capitalisation of about R400m.

Colin Young, property sector head at Old Mutual Asset Management, says he supports the move. "If we fund managers choose to invest in it, the primary objective is capital gain, not income yield."

Young says the new fund will add a new dimension to the JSE’s listed property sector, with a recognised management team which specialises in these developments in rural areas.

Angelique de Rauville, MD of listed property portfolio management company Provest, says innovation in the listed property sector is important, and that the introduction of this development company in other African states would be encouraging.

But De Rauville says the listed property sector is moving towards consolidation and that the introduction of the new fund would be against this trend. She says there are already three stocks in the "Resilient camp", namely Resilient, Acucap and Capital.

Resilient has stated it would sell its industrial properties to the new listing, in order to underpin the company with assets that provide sustainable earnings with development opportunities acting as a "sweetener".



Last modified on Wednesday, 07 May 2014 09:09

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