More and more property trust instruments on JSE
Changes to the management structure of property trusts will lead to more and more of these instruments soon on Johannesburg stock exchange, JSE-quoted. Thus says. John Rainier, chairman of the Association of property trusts. According to him the management of such units is still tightly controlled in the interests of investors are protected, but management is now allowed greater freedom in how they do business they will allow for better returns earned. The last time the listing in the property sector in the property loan stock sector, because such companies are allowed to be in a great deal of debt to use to opportunities in the real estate industry to respond, while property trusts buildings with cash should buy.
Although the higher gear ratio’s debt levels to higher yields lead may also increase risks lead. Property trusts are also now allowed on a limited scale of debt used to make up to 30% of the value of their portfolios in debt. According to Rainier is the most in property’s debt levels still far below the permitted level of 30%, while some of the trusts are not the authorized use it. In contrast, some loan stock companies have high debt levels, it is now a risk would make further extensions with neither debt finance. He believes in property so that in the current environment of higher interest rates in a better position to opportunities in the property market to react as property loan stock.
Rainier said that the proposed new Act Collective Bedingingskemas earlier this month by Parliament is submitted, provide for further concessions for the property trust industry. One is that property trusts now available in listed and direct property to invest, they will allow their portefeujes against declines in the value of the rand hedge. Another important change is that property trusts now also be allowed to possess property directly and not through a property company as in the past. The license has important tax implications in respect of capital gains, which make a big difference in such trusts’ returns can be made. If a property trust direct property investment or units in listed property companies sold, no capital gains tax payable. Under the current dispensation, a property company which owns property on behalf of property trusts, however, taxes on capital gains paid. The only way ditvrygespring may be by the property company to sell.
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