One of the main tenets of careful investors is to spread risk through diversification. For those interested in investing in property, the six Property Unit Trusts (PUTs) listed on the JSE Limited offer the perfect diversification tool, with total exposure to 400 different properties and more than 8,000 tenants.

“For a private individual to acquire a spread of property investments in addition to owning a home,” says Craig Hallowes, spokesperson for the Association of Property Unit Trusts, “the entry costs can be prohibitive. PUTs offer an alternative to direct ownership and represent an excellent way for investors to be exposed to a diversified investment in the property market, without the high capital requirement.”

Each of the PUTs offer investors a range of different buildings and properties, spread over different market sectors (retail, commercial and industrial) as well being distributed geographically. They do all, however, have their own unique characteristics, so investors who favour a particular segment of the property market, or a specific region, could select a PUT which is tilted in that direction. (See Table 1)

The Capital Property Fund, for example, is moving from being a more balanced fund into one which specialises in offices and industrial space. As Hallowes, also of Capital states, “Our management skills are based in these two sectors. We feel that we are better able to extricate value for unit holders by concentrating on these two sectors for the future. Currently, however, we hold a substantial amount of very good retail, which will be diluted over time as we buy more offices and industrial.”

The Marriott Property Fund (SA Corporate Real Estate Fund) currently has a bias towards industrial property. “This has been a consequence of the historical investment philosophy, with industrial assets being preferred, but this strategy has since been changed,” explains CEO Roger Perkin. “The fund will increase both its retail and office components in future - our view is that the portfolio should be more representative of the IPD index benchmark, which is weighted in favour of retail and office property.”

Each of the PUTs own properties around the country but, as James Templeton, CEO of the Emira Property Fund, puts it, investments are “diversified around the major metropolitan areas in SA”, because that is where the economic activity is. Perkin adds: “We believe that at least 50% of our assets should be concentrated in Gauteng, as this is the hub of the local economy and likely to show the most sustainable growth. We would look to have a bigger industrial exposure in KZN and bigger retail exposure in the Western Cape.”

There is general consensus among the six fund managers that future growth is likely to come from the primary metropolitan areas, specifically in Gauteng, KZN and the Western Cape.

For many investors, their principal property asset will be their home. Since the PUTs currently do not invest in residential property, they form an excellent extension to an individual’s existing property investments and exposure to commercial real estate.

Table 1: Characteristics of the listed Property Unit Trusts

(as at 30 September 2006)

For further information, please contact:

Craig Hallowes
Association of Property Unit Trusts
Tel: (011) 612 6800

Monica Meyer
Ogilvy Public Relations Worldwide / South Africa
Tel: (011) 709 9609