SA’s listed property sector gains first Residential REIT

Donna Oosthuyse, Director Capital Markets at the JSE says since we introduced the REITS structure in 2013, we have seen an increase in the number of REITS listing, with the number moving from seven in April 2013 to 32 today.

South Africa's residential sector is to be represented for the first time on the JSE’s main board, with the new listing of Indluplace Properties, a wholly owned subsidiary of Arrowhead Properties.

On friday, Indluplace listed approximately 176 million ordinary shares in the Residential Real Estate Investment Trust (REIT) sector at R10 per share. This puts the Company’s market capital at R1.76 billion at listing.

The share price increased by 5% to R10.50 per share shortly after the 9:00 AM listing. Indluplace will be the first residential focussed REIT listed on the JSE. “Indlu” is the Zulu word for “house”.

The company has portfolio valued at R1.6 billion and consisting of 95 properties and over 3 600 individual units.

South African listed residential property currently makes up only 2% of the total listed property market. Indluplace intends to invest in residential rental properties within the affordable and student housing market where it believes a demand exists.

Donna Oosthuyse, Director Capital Markets at the JSE, explains the significance of Indluplace’s listing: “Since we introduced the Real Estate Investment Trusts (REITS) structure in 2013, we have seen an increase in the number of REITS listing on the exchange, with the number moving from seven in April 2013 to 32 today. 

"This is a combination of new listings and companies that changed status from Real Estate Investment & Services to the new REIT structure.  As the first residential REIT to list on the exchange, Indluplace demonstrates that the REITS structure provides companies with opportunities to diversify their property assets, generate income and be exempt from capital gains tax,” she said.

Indluplace CEO, Gerald Leissner comments: “Indluplace, being the first listed focussed residential property fund, provides a diversification opportunity for traditional property investors and should attract new investors to the listed property sector. South Africa has strong demand for affordable rental housing and this translates to low vacancies and consistent rental growth. The fund will aggressively acquire additional revenue enhancing properties to generate growing income returns for shareholders. The fund has no debt on listing”

Indluplace’s listing followed a successful private placement of up to 40 million shares in the company for an issue price of R10 per share. Through the capital raised, Indluplace intends to grow its portfolio by acquiring yield-enhancing properties hoped to generate income soon after acquisition.