SA's first bare dominium property fund, offering the prospect of returns greater than normal property yields, has been launched by Catalyst Holdings.
Leverage Property Holdings, which has an initial R466m portfolio of 13 retail and office properties, was created by Catalyst Property Asset Managers. Funding was arranged by Catalyst Property Finance through the Cape of Good Hope Bank.
The bank has a 30% stake in Catalyst Holdings, which provides financial, technical and management services to the property and infrastructure industry, including assets under management of R18bn.
Catalyst Property Finance MD Lance Hunter says that backed by an innovative funding approach by Cape of Good Hope Bank, Leverage has cash resources and is actively seeking additional bare dominium properties.
'These are usually properties with a long lease, where the cash flow of the lease has been stripped out. This may be where the present value of the cash flow has been sold to a third party or where, as in the case of initial Leverage properties, the cash flow has been stripped out to the first bondholders.'
Hunter says the 13 initial properties that have been centralised in Leverage are in the major metropolitan areas and are tenanted by major companies.
The mortgage maturity dates range from 2006 to 2011, but the leases extend in most cases beyond these dates. As the properties are paid off and as new leases are signed in time, Leverage will have full claim to the income from the assets.
Hunter says Leverage is a long-term capital player and is expected to deliver annual returns of 21% a year and more in time. Property is enjoying a revival as an asset class, he says.
Leverage is modelled on similar funds in Europe. As a highly leveraged fund, its returns are expected to be superior to present yields in the JSE Securities Exchange SA real estate sector, says Hunter.
He says the company's aggressive acquisition policy is aimed at reaching a size when a JSE listing could be considered in the near term.
Publisher: Business Day
Source: Business Day
Bare dominium property fund a first
Posted On Friday, 22 February 2002 14:01 Published by eProperty News
SA's first bare dominium property fund, offering the prospect of returns greater than normal property yields, has been launched by Catalyst Holdings.
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