Tower Property Fund lists on Johannesburg Stock Exchange

jse launch - marc edwards live


“Tower was launched last year November when we put together an unlisted fund and we’ve brought it to market this morning. It’s a 1.65 billion rand portfolio. We’re the first REIT to list at a forward yield of 9 per cent and we bring a mixture of properties to the market from commercial and retail,” Tower Property Fund CEO Marc Edwards told CNBC Africa on Friday.

The Real Estate Investments Trusts (REIT) structure is a proposed tax structure that could see investors pocketing more dividends and earnings. The fund will be launched by the Spire Property Group and partners, with a portfolio that consists of 27 properties.

According to Edwards, the REIT structure is quite favourable in terms of aligning it with developers, who will put their property into the funding exchange for paper.

“We’re about 70 per cent office, we’d like to reduce that office exposure to around 30 per cent and bring our retail up to 50 per cent. Most of the pipeline is retail and Cape and Johannesburg-based, with one new property coming in KwaZulu-Natal,” Edwards explained.

“Our strategy is to look at properties between 50 and 200 million rand until we reach three and a half billion rand in size, which we have to do as soon as possible.”

Despite their shareholder base being raised in a volatile period, the Tower Property Fund has been supported by large institutions such as Stanlib and smaller asset managers such as Grindrod President and Boe Stockbrokers.

The new REIT structure is expected to improve efficiency and streamlining in the South African property market.

“From our point of view, it makes the overseas and local investors see the transparency of the fund a lot easier from a tax perspective and so we really believe it will add value to the entire property sector. I think some big listings are going to come as a result of the REIT structure.”


Tower sets its sights in R300 million for placement

BUSINESS DAY: July 15 – Nick Hedley

Tower Property Fund, which will officially list on the JSE on Friday, said last week its private placement was fully committed of underwritten.

The fund said that based on its engagements with those investors providing pre-commitments and an underwrite, the board considered R300m “to be the optimal amount of capital to be raised” in its private placement.

Tower, which has an experienced management team in the listed property space, aims to differentiate itself with a focus on “greening” its properties over time to save costs and make its buildings more competitive.

At listing, if certain acquisitions are implemented, the fund’s property portfolio will consist of 27 properties valued at R1.65bn. The portfolio includes mixed-use Cape Quarter complex in Green Point, Cape Town, as well as a five star, green star-rated office complex in Grayston Drive, Sandton.

Tower is being launched by Spire Property Group and partners, and has an experienced management team with a successful track record. Spire successfully listed Paramount Property Fund, which grew to R3.5bn when it was sold to Growthpoint Properties in 2006.

The management team includes Spire’s Marc Edwards, Bruce Kerswill and Keit Craddock, as well as partners Johan Malherbe and Bruce Rogerson, who are former founding members of Mettle Property Group.

Tower said on Friday it had received binding subscription undertakings totalling R178m, equating to 20.4-million shares at R8.70 per share.

Stanlib Asset Management committed R73m, while Grindrod Asset Management and Prescient INvestment Management had each committed R50m. 3PM Investment had committed R5m. JSE-listed Fortress Income Fund had committed to an underwrite of up to R150m.

Tower’s acquisition portfolio includes five properties that are being acquired from Fortress.

Stanlib head of listed property funds Kellen Ndlovu said that Tower was an attractive investment for Stanlib partly because of its management team.

In addition, he sais, “we believe that pricing – a yield of 9.5% including the underwriting fee – is reasonable for the portfolio and is relatively attractive compared to similar smaller cap property companies, who are trading at around 8.5% yields.

Mr Ndlovu said Tower was tradding “quite higher than the sector average yield of 7.1%.



Nick Hedly

Moneyweb interview with Marc Edwards

HILTON TARRANT: The JSE’s newest listing will make its debut next Friday. Tower Property Fund will list under the new REIT structure and is being launched by Spire Property Group. Mark Edwards is chief executive of Tower. Mark, the million-dollar question – why list and why now?

Listen to the interview here and now…. Interview with Moneyweb