The exploitation of funds by asset managers who charge high management fees is a worrying factor in the world of property asset management. Many asset managers tend to push for portfolio growth more with a view to increased fee income than shareholder value.

'Unlike conventional asset managers who charge a flat fee for the size of assets under management, we have to work for our fees by adding value to our clients' property portfolios,' said Lyons.

'It is not just a question of growing the size of assets under management, but we have to show improved returns on these assets,' said the group.

It said 80% of its fee income was annuity based, 40% came from regular monthly fees and the balance from performance-based fees.

Financial director Ian Hewett said the equity interest further ensured genuine loyalty to the fund and its other shareholders.

Lyons holds 45% of the fund, which should debut on the property loan stock sector of the JSE Securities Exchange SA in October. The reduction of its holdings to 10% of the fund in the next 12 months would be done by expanding the shareholder base to include other financial institutions and blue-chip corporate clients.

Lyons plans to grow the fund to about R750m at listing, from R440m, and to more than R1,5bn at the end of next year. The expansion would remain within the fund's current focus. About 85% of the fund's portfolio consists of office property and 15% industrial property.

Hewitt said the group did not wish to be active in the retail property sector as their focus was in long lease and low risk properties.

'Retail is a specialised market and can be tricky,' said Hewett.

About 80% of the fund's portfolio was in Gauteng and 15% in the Western Cape.

Unlike the trend in the sector, Lyons' Gauteng office portfolio does not reflect a strong bias towards the northern suburbs of Johannesburg. 'We concentrate on quality of tenants more than in buildings,' said Hewett.

Lyons has grown total assets under its management to R4,5bn.

Hewett said this was a fraction of the market potential given the estimation that corporate and institutional property portfolios in SA were about R60bn each, with a further R150bn in the public sector.

'We are just scratching the surface,' said Hewitt.

Lyons' clients include the recently won Gauteng public works department. Others include Clover, Ericsson, MGX, Nestlé, Chemserve, Unilever, 3M, Proctor & Gamble, Aspen, and Plascon