Investec to list innovative warrants over property stocks.

Posted On Wednesday, 20 August 2003 02:00 Published by
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From Wednesday, 20 August, Investec is offering warrants over the popular listed real estate sector on the JSE Securities Exchange.

From Wednesday, 20 August, Investec is offering warrants over the popular listed real estate sector on the JSE Securities Exchange. These instruments are new to the South African market and are unique to Investec. For the first time investors can obtain geared exposure to five listed property stocks with no minimum investment amount.

Garreth Montano from  Investec says they will be issuing 25 million warrants over each of the property unit trusts Grayprop and Martprop and property loan stock companies Growthpoint, Pangbourne and Redefine.

"With a declining interest rate environment, the more conservative investor with money on call will now have an attractive alternative. Declining interest rates can have a positive impact on the value of the property sector. These warrants have several unique features, and offer geared returns as well as potential tax advantages," explained Montano.

"The price of our warrants is approximately half the purchase price of the underlying investment. While other warrants have fixed strike prices (the final payment to take up the share), these 10-year property warrants have a variable strike price. The price will decrease by the value of distributions paid by the underlying share and increase by an interest amount."

He said the structure of these warrants allow the benefit of gross distributions (a combination of dividends and interest) to be applied to the final strike price. "So," concluded Montano, "if distributions are greater than the accumulated interest this will reduce the final payment, possibly to  R0.01, at which point in time the warrant will be automatically exercised and the holder of the warrant will become the owner of the security at no additional cost."

Montano says that given the prevailing market conditions and the profiles of these property shares, the option to take up the shares could occur in as little as five years. The expiry date is initially 10 years, but if the accumulated payments from the distributions reduce the strike price to zero, the option automatically terminates and the share ownership transfers to the warrant holder.

ENDS

Prepared by:                Beachhead Media & Investor Relations (Jennifer Cohen)

                                    011 214 2401 / 082 468 6469 / This email address is being protected from spambots. You need JavaScript enabled to view it.

On behalf of:               Investec Treasury and Specialised Finance

Further info:                Garreth Montano        

                                    011 286 4672 / 082 469 8659 / This email address is being protected from spambots. You need JavaScript enabled to view it.

Email:                          This email address is being protected from spambots. You need JavaScript enabled to view it.


Publisher: Investec
Source: Investec

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