Arrowhead Properties R500m proposed investment in rental housing market

Posted On Friday, 26 July 2013 12:34 Published by Commercial Property News
Rate this item
(0 votes)
Arrowhead Properties R500m proposed investment in rental housing market
Gerald LeissnerReal estate veteran Gerald Leissner, who came out of retirement to run Arrowhead, has over the past 18 months doubled the fund’s property value — from R1,5bn to R3bn.
 
Arrowhead’s portfolio comprises mostly older, higher-yielding office and retail buildings in secondary areas.
 
Last week, the company announced plans to acquire a R500m portfolio of residential rental apartments, a significant move as JSE investors currently have limited exposure to SA’s housing market.
 
Sister funds Premium Properties and Octodec Investments are the only listed players that own residential property.
 
The SA listed sector, unlike its US and European counterparts, has historically shied away from residential property, as the general view is that retail, office and industrial buildings offer lower risks and better returns.
 
But Leissner, who three years ago unsuccessfully tried to bring the first specialist residential fund to the JSE, disagrees. At the time, the ex CEO of former ApexHi Properties battled to assemble a big enough portfolio that would offer the size and liquidity to pique the interest of institutional investors.
 
However, Leissner believes perceived risks in terms of residential rental arrears and defaults are often overstated.
 
In fact, he says, the housing market now offers better rental growth prospects than office and industrial property given the extent to which demand for affordable rental accommodation in SA outstrips supply.
 
“We see the residential market as an important new avenue for growth. And it offers great diversification from commercial property. ”
 
The R500m residential portfolio under negotiation is owned by a single, private property owner. The portfolio, which comprises nearly 70 buildings, is spread across various lower-income areas like the Johannesburg CBD.
 
Leissner is keen to further increase Arrowhead’s exposure to the residential market, rental apartments that typically fetch R2000R5000/month.
 
“We will look at all deals, provided they fit the fund’s low-risk/high-yield investment criteria. Arrowhead only invests in buildings with a forward net yield of at least 10%.”

Source: FM

Last modified on Friday, 26 July 2013 13:03

Most Popular

Equites Property Fund’ prime logistics portfolio delivers exceptional returns

May 04, 2022
Andrea Taverna-Turisan
Equites Property Fund Limited today announced growth in its distribution per share of…

When is eviction legal? All you need to know about dealing with problem tenants

May 04, 2022
Evictions
Buying an investment property is great, especially when you’ve chosen a good location.…

Steilloop Shopping Centre makeover exceeds customer needs

Apr 22, 2022
Rural Limpopo's Steilloop Shopping Centre was bought by developer, GMI Property Group…

Deadline looms for energy performance compliance for commercial buildings

Apr 25, 2022
Energy certiticate
By 7 December 2022, commercial properties in specified sectors must have obtained their…

First quarter Rode’s Report raises doubts over the Sectional Titles Schemes Management Act

Apr 25, 2022
Default Image
The latest issue of the Rode’s Report has brought into question the practicality of the…

Please publish modules in offcanvas position.