Freedom Property Fund lists on JSE

Posted On Tuesday, 17 June 2014 13:40 Published by
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Freedom Property Fund makes its debut on the JSE.

Tyrone Govender

Freedom Property Fund (FDP) made its debut on the JSE on Thursday. The new listing is eyeing R5bn worth of residential developments and R1bn worth of industrial projects over the coming years.

CEO Tyrone Govender said that with Freedom's gearing at just 3%‚ "the idea is really to go and capitalise on the largely ungeared portfolio‚ to roll out the developments that we have".

On its first day‚ 445‚700 shares worth R4.67m were traded. The shares rose as high as R1.50 before closing near the intraday low of R1.11 at R1.12. Prior to listing‚ Freedom placed just more than 1-billion shares at an issue price of R1 each.

The listed property sector has until recently tended to overlook the residential sector. Stanlib data from a year ago showed the listed sector had only 1% residential exposure by value‚ though recent listings and new strategies by some existing funds such as Arrowhead Properties could see that figure edging upwards.

The fund's R1.56bn portfolio at listing is mainly industrial focused‚ though Freedom has ambitious plans to target the low-and middle-income housing market‚ particularly in mining towns. It has positioned itself as a capital growth developer rather than a distributor of rental income.

Developments would be largely debt funded‚ and Freedom would consider entering the bond market‚ depending on which was the most cost-effective approach. Mr Govender said the industrial property development pipeline included expanding an existing 20‚000m² office park by adding up to 28‚000m². It also included additions to an 8‚000m² warehouse‚ which could be expanded a further 5‚000m².

"We also have a wonderful opportunity out near the Heidelberg area where we could put another 60‚000m² of industrial. "But the biggest part of where our development focus would be is in the residential portfolio. We've got a pipeline currently‚ without acquisitions or disposals of the existing opportunities‚ of probably about R5bn‚ which we can develop.

" This figure did not take into account any new opportunities that might arise. Mr Govender said Freedom was targeting the lucrative lower to mid-sized housing market in decentralised areas‚ "where there's great demand". Freedom planned to develop‚ hold and lease properties rather than selling them. Mr Govender has previously served as an executive director at Growthpoint Properties and Investec Property Group‚ among other roles.

Stanlib said last year while South African listed property had only 1% residential exposure by value‚ developed markets had 11.4% exposure and emerging markets 15.2%. Historically‚ investors could only access residential opportunities on the JSE through Premium Properties and Octodec Investments.

Last year‚ Arrowhead also entered the residential space by buying two large residential rental portfolios for a combined R556m. Mr Govender said residential property developments held for leasing will become "an increasingly hotly contested sector and gain critical mass". "Freedom is the first to take this concept to the JSE main board as a property capital growth fund‚" he said.

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