Property loan stocks gain favour

Posted On Saturday, 01 January 2000 03:01 Published by eProp Commercial Property News
Rate this item
(0 votes)


NEW life is being breathed into the listed property stocks sector which is vying with cash and bonds for investors' attention. Bruce Kerswill, Director of Cape Town based Spire Property Services which brought the Paramount Property Fund Limited (Paraprop) to the JSE Securities Exchange earlier this month, says the property sector is fast regaining its popularity as an investment class.

Bruce KerswillParamount which has a R355-million portfolio of 21 prime commercial, retail and industrial properties is a loan stock company which has structured itself to provide high yields and sustainable growth by using innovatively-structured deals and positive gearing to ' turbocharge' the yield in the initial years.
Kerswill says Paramount is a 'new generation' property fund, structured to provide high yields.
Spire plans to grow the portfolio to around R1- billion, and to deliver an annualised first-year return of around 16%.
Its investment strategy is to invest only in high-quality assets, which will sustain value. The portfolio of properties in Paramount are all strategically located in areas of high market demand, and include several landmark buildings including trendy Sovereign Quay adjoining the V&A Waterfront in Cape Town, Longkloof Studios, the heart of SA's thriving film industry, and Pretoria's Hatfield Mall, Campus Building and Standard Plaza.
The portfolio is diversified both by property-type, including office, retail and industrial and by geographic location in the major metropolitan areas.
Kerswill says the listed property sector's market capitalisation has more than doubled in the past six months. More activity is expected as pension funds and institutions, which hold around R60-billion in direct property holdings, start to securitise their property holdings in the next two to three years.
'We believe the tide has already turned for the property sector since the 1990s, when institutional investors reduced new investment in property in favour of more liquid investments.
They have rebalanced their portfolio sector allocations following the relaxation of exchange controls, and, with the current equity market volatility, are now re-looking at the property sector, due to its higher yields and lower risk. However, for many reasons, but particularly the need for greater liquidity, they are looking at the listed property sector.
Kerswill says the increased activity in the sector brought four new property companies to the JSE Securities exchange in the past year, and he believes the time is ripe for further funds in future.

Last modified on Wednesday, 23 April 2014 13:28

Most Popular

Residential property market gathering momentum, says Eazi Real Estate

Nov 18, 2020
In this last quarter concluding in December 2020, the residential property market…

Lockdown impacts buying trends of generations of home buyers

Nov 15, 2020
The Covid-19 pandemic and lockdown has been a catalyst for highlighting the different…

Second-hand shopping is being revolutionised and expanding the circular economy

Nov 18, 2020
EPP CEO_Tomasz Trzoslo
Conscious consumers are championing the resale of goods to reduce waste and extend the…

New cutting-edge Massmart Distribution centre launches one of the biggest Distribution Centre in the Western Cape

Nov 24, 2020
MASSMART’S brand-new, cutting-edge centralised distribution centre for the Western Cape…

SA commercial real estate delivers in excess of 12% yield on equity

Nov 18, 2020
Steven_Brown (1)
A silver lining amongst the many dark clouds dominating South Africa’s current economy…

Please publish modules in offcanvas position.