Investec Property Fund to bulk up on Retail

Investec Property Fund to bulk up on Retail

Investec Property Fund is looking at bulking up on retail property as it remains underweight in that sector. It also has ambitions to include the Firs and Hyatt Regency, in Rosebank, in its portfolio and believes these properties will benefit from the good transport infrastructure of the Gautrain, thus boosting the listed fund.

Sam Leon, the CEO of the R1.7bn Investec Property Fund, said the objective is to get to a fighting weight which is somewhere between R7bn and R10bn over time. However he could not put a timeframe saying it was not easy as the company would not bulk up for the sake of bulking. However, Leon concedes that the fund is underweight in retail.

“It is illogical that we’re clearly underweight retail with under 10% of GLA (gross leasable area). We are looking to create the right retail product and then we will put it in the fund. But again it’s not for the sake of getting retail it’s for the sake of getting good property. So we are looking to bulk up on the retail side,” Leon said.

“One of the potential products that could go into the fund at the appropriate time once it’s bedded down is the Firs [complex] in Rosebank ... It’s not yet offered to the fund that is something in the pipeline ... It clearly has the quality that we would like to see in the fund ... Good transport infrastructure works and has a [good] impact for real estate.”

Investec Property owns the Firs shopping centre, offices and The Hyatt hotel, but it is not yet included in the listed fund. Leon said in terms of the gross leasable area, the fund was 65% industrial, 25% offices and about 10% retail. By revenue the fund is 40% industrial and 50% office.

“Our office portfolio as we currently stand is very defensive. We have got Woolworths with a long term lease in excess of ten years, which is their head-office and Investec’s regional office in [Umhlanga in Durban] in excess of ten years ... So in this case the offices are very defensive because of the type of tenancy and the length of the lease.”

Leon added that the fund has been fairly stable since it listed in April. It has previously said that it aims to provide a dividend yield of 9.5%. Investec’s Property Fund debuted at R10.60 in April. On Wednesday it closed flat at R10.30.

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Denny Crane

Denny Crane
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