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Property loan stocks gain favour

Posted On Saturday, 01 January 2000 03:01 Published by eProp Commercial Property News
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NEW life is being breathed into the listed property stocks sector which is vying with cash and bonds for investors' attention. Bruce Kerswill, Director of Cape Town based Spire Property Services which brought the Paramount Property Fund Limited (Paraprop) to the JSE Securities Exchange earlier this month, says the property sector is fast regaining its popularity as an investment class.

Bruce KerswillParamount which has a R355-million portfolio of 21 prime commercial, retail and industrial properties is a loan stock company which has structured itself to provide high yields and sustainable growth by using innovatively-structured deals and positive gearing to ' turbocharge' the yield in the initial years.
Kerswill says Paramount is a 'new generation' property fund, structured to provide high yields.
Spire plans to grow the portfolio to around R1- billion, and to deliver an annualised first-year return of around 16%.
Its investment strategy is to invest only in high-quality assets, which will sustain value. The portfolio of properties in Paramount are all strategically located in areas of high market demand, and include several landmark buildings including trendy Sovereign Quay adjoining the V&A Waterfront in Cape Town, Longkloof Studios, the heart of SA's thriving film industry, and Pretoria's Hatfield Mall, Campus Building and Standard Plaza.
The portfolio is diversified both by property-type, including office, retail and industrial and by geographic location in the major metropolitan areas.
Kerswill says the listed property sector's market capitalisation has more than doubled in the past six months. More activity is expected as pension funds and institutions, which hold around R60-billion in direct property holdings, start to securitise their property holdings in the next two to three years.
'We believe the tide has already turned for the property sector since the 1990s, when institutional investors reduced new investment in property in favour of more liquid investments.
They have rebalanced their portfolio sector allocations following the relaxation of exchange controls, and, with the current equity market volatility, are now re-looking at the property sector, due to its higher yields and lower risk. However, for many reasons, but particularly the need for greater liquidity, they are looking at the listed property sector.
Kerswill says the increased activity in the sector brought four new property companies to the JSE Securities exchange in the past year, and he believes the time is ripe for further funds in future.

Last modified on Wednesday, 23 April 2014 13:28

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