Investec Australia Property Fund is an Australia-based real estate investment trust which listed on the Johannesburg Stock Exchange (JSE) in 2013 as the first inward-listed Australian REIT. The fund has been established to buy commercial real estate assets across the office, industrial and retail sectors, located in major metropolitan areas and established commercial precincts in Australia and New Zealand.

Today comprising 19 office and industrial properties with a gross lettable area of over 169 000m2, the fund allows South African investors to buy into the Australian property market and benefit from the strong Australian dollar. Property assets are valued at AUD493 million.

The fund is governed and operated by Investec Property, and is registered as a management investment scheme in Australia, allowing for tax-efficient flow of net income to investors who buy Investec Australia Property Fund shares.

Investec Australia Property Fund has been one of the top performing inward listed property stocks on the JSE, delivering a total return of 67.8% since Investec Australia Property Fund shares were first put up for sale. Success has been attributed to strong real estate fundamentals and tight operational controls. To date, the fund has been focused on the office and industrial sectors.

The latest financial year highlighted a strong performance in terms of distribution and net asset value growth. Dividends grew by 13.2% in AUD, equating to 31.4% in ZAR due to depreciation of the Rand against the Australian dollar. Data was further boosted by stability of income from tenants and appreciation in Investec Australia Property Fund share price. The fund is aggressively pursuing a number of acquisitions in Australia, with long-term plans to diversify into the retail market and expand into New Zealand.

The international expansion into Europe is in line with Hyprop’s strategy of acquiring or developing high-quality shopping centres in emerging markets, and provides investors with a rand hedge buy. Hyprop’s data for the last six months of 2015 was impressive. Through a number of new acquisitions, asset value increased from R28 billion to R33 billion. Continual upgrades and extensions ensure that the core portfolio in South Africa remains of a high quality. For the 2016 financial year, R180 million has been set aside for refurbishments, with a further R93 million earmarked for equipment replacement.

The forecast is good for the fund, with the group continuing to deliver on its growth objectives. The live online JSE chart shows that Investec Property Fund share price has grown steadily as a result. Distribution growth is expected to continue to rise in the future, whilst persistent rand depreciation against the Australian dollar will further position Investec Australia Property Fund shares as an attractive rand hedge buy.

The fund trades at a discount to its Australian and inward listed peers, providing a compelling entry point into a portfolio that provides above market returns in hard currency. Investec Australia Property Fund shares look to be a mouth-watering prospect for South African investors.

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REIT

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