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ANOTHER NEW LISTING is set to join the ranks of the R124bn listed property sector when high-yielding Vividend Income Fund makes its JSE-debut mid-November. The new fund will list with a relatively small R450m portfolio at an expected forward income yield of around 11%, way higher than the average 6% to 8% currently on offer through the sector’s existing 18 counters. The initial portfolio includes two shopping centres and five office blocks, all individually valued at between R30m and R100m. The Vividend’s flagship property is Clearwater Crossing on the West Rand, previously in shopping centre developer Retail Africa’s stable.
Vividend is the brainchild of, among others, Bruce Rubenstein, CEO of venture capitalist Vestacor, which owns stakes in Retail Africa as well as retailers Stuttafords, Look & Listen and WM Spilhaus. Rubenstein’s co-founders and fellow directors are an interesting array of personalities, including one-time financial journalist and UCT economics lecturer Ari Jacobson, who until recently headed foreign exchange business Master Currency before the latter was sold to the Bidvest Group.
Other directors are Western Cape-based property developers Mark Sandak-Lewin and Giancarlo Lanfranchi, Vestacor CFO Robert Amoils, renowned structured finance dealmaker and former Johnnic CEO Michael Jacobson and Zitulele “KK” Combi, who holds chairs at a number of companies, including Pioneer Foods.
More intriguing is the fact that Piet Viljoen, prominent value investor and founder of Regarding Capital Management (RE:CM), is backing Vividend with a substantial initial investment of R150m. Vividend will be RE:CM’s first entry into listed property since 2006. RE:CM, with R7bn in assets under management, has until now shied away from listed property, as Viljoen’s well-documented view has been that the sector is overvalued.
Viljoen says listed property remains expensive, with many counters trading at historic yields of below 7%. Vividend, on the other hand, brings a compelling value proposition to the sector through its focus on smaller properties, which the fund is currently able to buy at attractive yields of 10% to 12%. Viljoen says Vividend ticks all the boxes. “We understand what its competitive edge is, we have faith in its management team and we like the fact its founders are putting their own money into the fund.’’
RE:CM isn’t the only asset manager to have already undertaken to subscribe to Vividend scrip prior to its listing. Another R150m has been raised from Element Investment Managers; while British-based Credo Group – started by a bunch of former South Africans a few years ago with the aim to invest in Britain and Europe’s property markets on behalf of high net worth SA investors – has also committed to take up R100m worth of Vividend shares.
Vividend CEO Jacobson says although the portfolio will initially be a relatively small one, the intention is to grow assets to around R1,5bn by August next year. “We intend picking up more properties in the price range of R30m to R100m, or slightly larger if the opportunity allows. The big funds are sellers of those assets for structural reasons and small, private players can’t afford to buy in the current market, where bank lending is tight.”
However, Vividend won’t be rushed into buying. Says Jacobson: “We have a pipeline of 20 potential acquisitions worth more than R1bn but rely on an exceptionally rigorous process to ensure only properties with sustainable income streams are bought.”
Property analysts welcome the increased choice new real estate listings such as Vividend will offer. Plans to bring at least six other listings to the JSE – including the likes of Old Mutual and Attfund’s retail-focused portfolios valued at R12bn and R8,3bn respectively – have been announced over recent months.
But Evan Jankelowitz, co-head of Stanlib’s property franchise, notes: “More choice is great – but it also means investors will have to become far more discerning in their stock selections. Some players will no doubt use the JSE as a dumping ground for inferior buildings. Thus the quality of underlying properties and management expertise will become more important than ever.”
Vividend is the brainchild of, among others, Bruce Rubenstein, CEO of venture capitalist Vestacor, which owns stakes in Retail Africa as well as retailers Stuttafords, Look & Listen and WM Spilhaus. Rubenstein’s co-founders and fellow directors are an interesting array of personalities, including one-time financial journalist and UCT economics lecturer Ari Jacobson, who until recently headed foreign exchange business Master Currency before the latter was sold to the Bidvest Group.
Other directors are Western Cape-based property developers Mark Sandak-Lewin and Giancarlo Lanfranchi, Vestacor CFO Robert Amoils, renowned structured finance dealmaker and former Johnnic CEO Michael Jacobson and Zitulele “KK” Combi, who holds chairs at a number of companies, including Pioneer Foods.
More intriguing is the fact that Piet Viljoen, prominent value investor and founder of Regarding Capital Management (RE:CM), is backing Vividend with a substantial initial investment of R150m. Vividend will be RE:CM’s first entry into listed property since 2006. RE:CM, with R7bn in assets under management, has until now shied away from listed property, as Viljoen’s well-documented view has been that the sector is overvalued.
Viljoen says listed property remains expensive, with many counters trading at historic yields of below 7%. Vividend, on the other hand, brings a compelling value proposition to the sector through its focus on smaller properties, which the fund is currently able to buy at attractive yields of 10% to 12%. Viljoen says Vividend ticks all the boxes. “We understand what its competitive edge is, we have faith in its management team and we like the fact its founders are putting their own money into the fund.’’
RE:CM isn’t the only asset manager to have already undertaken to subscribe to Vividend scrip prior to its listing. Another R150m has been raised from Element Investment Managers; while British-based Credo Group – started by a bunch of former South Africans a few years ago with the aim to invest in Britain and Europe’s property markets on behalf of high net worth SA investors – has also committed to take up R100m worth of Vividend shares.
Vividend CEO Jacobson says although the portfolio will initially be a relatively small one, the intention is to grow assets to around R1,5bn by August next year. “We intend picking up more properties in the price range of R30m to R100m, or slightly larger if the opportunity allows. The big funds are sellers of those assets for structural reasons and small, private players can’t afford to buy in the current market, where bank lending is tight.”
However, Vividend won’t be rushed into buying. Says Jacobson: “We have a pipeline of 20 potential acquisitions worth more than R1bn but rely on an exceptionally rigorous process to ensure only properties with sustainable income streams are bought.”
Property analysts welcome the increased choice new real estate listings such as Vividend will offer. Plans to bring at least six other listings to the JSE – including the likes of Old Mutual and Attfund’s retail-focused portfolios valued at R12bn and R8,3bn respectively – have been announced over recent months.
But Evan Jankelowitz, co-head of Stanlib’s property franchise, notes: “More choice is great – but it also means investors will have to become far more discerning in their stock selections. Some players will no doubt use the JSE as a dumping ground for inferior buildings. Thus the quality of underlying properties and management expertise will become more important than ever.”
