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Yet another offshore property listing

As concerns mount about the waning investor pool of capital to support new property listings.

The listings boom in SA’s more than R350 billion-worth listed property sector is continuing apace, with yet another offshore-focused property company eyeing a JSE debut.

This time Mauritius-domiciled Mainland Real Estate is planning a secondary listing on the JSE’s AltX on December 9, with an expected market capitalisation of R22 million.

Mainland plans to invest in income-generating office and industrial properties in the UK and Western Europe, in regions such as the Netherlands and Germany. Its initial investments will include purchasing stakes in property companies in the UK and Europe – with these investments making up 5% of its total assets.

Mainland’s property investment ambitions hinge on the ability to raise capital through the JSE listing, which will also broaden its investor base.

A successful listing will bring the tally of offshore property listings this year to four and more than 12 property listings (offshore and SA-focused) over the past two years.

Recently-listed offshore counters that have vied for investors’ capital include Eastern European-focused Global Trade Centre, Greenbay Properties and Echo Polska Properties and UK-focused mall owner Hammerson.

On Tuesday, Liberty Holdings will list a R6 billion portion of its R30 billion property portfolio on the JSE, through a real estate investment trust called Liberty Two Degrees. It will bring Johannesburg-based blue-chip malls to the market, including Nelson Mandela Square, Sandton City Eastgate and Melrose Arch.

Mainland management, led by CEO Lyndon Kan, are planning to raise over R10 million in a private placement with institutional shareholders, by issuing 300 000 shares at £2 (R35.17 at the time of writing).

Income-chasing investors have supported offshore property counters with aplomb over the past ten years on the back of the hard-currency earnings they offer. The case for investing in offshore markets has been heightened, given SA’s economy that is growing at a glacial pace and the weak rand, which boosts hard-currency returns. 

Underscoring this is figures from Stanlib which show that 37% of earnings of the sector derive from markets including the UK, Australia, Central and Eastern Europe so far this year. Ten years ago the sector had no exposure to offshore markets. About R26 billion has been raised so far this year by property companies through initial public offerings, book builds, rights issues and dividend reinvestments, according to Stanlib.

Market watchers are concerned that the many offshore listings are impacting the demand for local property stocks, given the limited pool of capital investors have to invest in the sector.

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Can I ask 2 questions (and no sarcasm suggested):1) why are these sort of REIT’s nowhere as popular in the rest of the financial world? 2) why are annuities nowhere as popular as they are in south Africa? these are actually related questions. as regards 2 – as I understand yr friendly govt has made it that way -WHY? my view is that the govt and insurance companies have a very nice monopoly going on YOUR money. likewise with REIT’s. remember capital and counties down 50% in a year!!! beware!!!!

Just how do you measure popularity of REITs?
REITs haven around for over 50 years, particularly in the US. One would think, therefore, if they were not “popular” then they would have been naturally faced out over the 50 odd years period.

To those more knowledgeable:

Can you have a book build without an associated IPO?

If not, then what does this “About R26 billion has been raised so far this year by property companies through initial public offerings, book builds, rights issues and dividend reinvestments, according to Stanlib” mean?

The quoted line seem to suggest book build and IPO are unjoined. So,how do you raise funds through a book build if not for IPO purposes?

With sort of of money you couldn’t get a flat in Clifton …

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