This follows Sanlam Properties and the Kuper Legh Property Group reaching agreement on the establishment of the new entity, which will be named the Vukile Property Fund, subject to normal regulatory approvals.

This follows the formation of the MICC Property Income Fund, a diversified property loan stock company established by Sanlam with a portfolio of R900 million, which was listed on the JSE in October last year.

Banus van der Walt, the managing director of Sanlam Properties, said yesterday that Vukile would offer unit holders an attractive initial yield of about 12 percent, which, together with its relatively low gearing of 45 percent, made it a premium value proposition relative to other large funds.

He said Vukile had been initiated as part of Sanlam's property unitisation strategy and was the result of a merger between directly held Sanlam properties valued at R1.1 billion, Kuper Legh's R500 million property portfolio and third-party vendor properties valued at R350 million.

Angelique de Rauville, the managing director of Investec subsidiary Provest, said it was "outstanding" for the sector that Sanlam was bringing a second property listing to the market. 

De Rauville expressed the hope that more institutions would follow the likes of Sanlam and Rand Merchant Bank by securitising their properties.

She believed the listing was the right size in terms of total assets and market capitalisation.

However, she said the tradeability of the stock could remain an issue depending on how successful Sanlam was in obtaining a diverse unit holder base.

"That will all depend on their initial placement offer and the success of their capital raising exercise. I know the properties well and they've priced themselves well to succeed," she said.

Van der Walt said Vukile had access to the asset management support of Sanlam Properties but would also benefit from the involvement of David Kuper and Chick Legh, both of whom had a proven track record.

David Kuper, the chairman of Kuper Legh, said the company was extremely excited by the opportunity to partner Sanlam Properties in establishing Vukile.

"We will be concentrating on well-defined investment strategies with a view to enhancing shareholder returns," he said.

Van der Walt said the local listed property sector had become an attractive investment alternative due to its increased size and the quality of recent entrants.