Corovest International to list property fund

Posted On Wednesday, 05 April 2006 02:00 Published by
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Corovest International will shortly list its CIREF property fund on the Alternative Investment Market of the London Stock Exchange
Corovest International, the UK arm of South Africa-based Coronation Investments and Trading, will shortly list its CIREF plc property fund on the Alternative Investment Market (AIM) of the London Stock Exchange, raising a total of 380 million rand in capital in the process.

Detailing the listing, Corovest said that with a target annual payout to shareholders of 4.5% of net asset value, CIREF offered South African investors an offshore property investment opportunity on the fastest growing junior market in the world. South African investors were expected to make up around 30% of the targeted 380 million rand in capital to be raised.

Corovest International CEO Mike Watters said that as a listed vehicle, CIREF would be positioned to meet exchange control regulations for asset swaps with South African institutions.

"The recent relaxation of exchange control regulations to a two million rand limit for offshore personal investment also bodes well for private investors who wish to seize this opportunity," he added.

CIREF's predecessor, Corovest International Real Estate Fund, was formed in October 2002 and controls total assets of approximately 1.6 billion rand. The directors are targeting total assets of over 7.4 billion rand within the next five years.

Compounded over the same time period, return to investors is targeted to reach 15% per annum. The share is expected to float at close to net asset value, being around 15.00 rand per share.

CIREF's portfolio split will initially cover lower-risk stable income properties including offices, industrial buildings and shopping centres in the UK and two Swiss supermarkets, as well as three lucrative retail developments in major economic hubs across the UK.

Corovest Fund Managers will manage CIREF and hold approximately 15% of the fund after listing. Watters said that select South African investors would be
offered the opportunity of investing up to a total value of 110 million rand through CIREF's local representatives Standard Bank. This was a logical step, he noted, as around 30% of Corovest International Real Estate Fund had historically been owned by South African investors.

CIREF intended to use the capital raised on listing for completion of development projects valued at 6 billion rand and acquisitions already identified in the UK and Europe, with a 25% reserve for future acquisitions.

Looking ahead, Watters said that the fund would consider a dual listing on the JSE, subject to exchange control approval.

"The upcoming Real Estate Investment Trust (REIT) legislation in the UK, due in 2007, will introduce a similar listed environment to South Africa's property unit trust companies (PUTs). As CIREF was expected to convert to the REIT structure, investors would reap the indirect benefit from the favourable tax status in due course."

The REIT legislation gives tax exempt status to the fund if at least 90% of income is distributed.  In addition, provided a charge of 2% is paid by the fund to the authorities for the conversion to the REIT structure, latent capital gains tax liabilities will be eliminated, which was particularly important for CIREF in respect of its three major retail developments.

I-Net Bridge
Publisher: I-Net Bridge
Source: I-Net Bridge

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