Future growth LOOKS BRIGHT
Futuregrowth Asset Management’s Community Property Fund (CPF) delivered 24.3% for the 12-month period ending December 2016.
This was the second consecutive year of good returnsstrong growth, well ahead of South Africa’s listed property sector’s return of 10.20% for the same period.
Specialist investor Futuregrowth Asset Management manages around R170 billion of assets on behalf of our investors.
The CPF has been running for over 20 years and makes strategic acquisitions of shopping centres in townships and rural areas.
CPF portfolio manager Smital Rambhai says great efficiencies drove the fund’s improved returns.
“The main drivers were strong rental-income growth, a reduction in vacancies, better control of expenses and additional sources of income from promotions and advertising,” he says. “We’ve also seen an improvement in the quality of the tenants, which reduces risk for the investor.”
He added that demand for rental space in the CPF centres continues to be strong, and plans are underway to expand some of the centres owing to this strong demand from tenants.
“In 1996, when the fund was launched, no one was interested in financing township shopping centres and they were a no-go zone for developers. Things have changed since then, and Futuregrowth continues to reap the benefits of being among the first to invest in the township sector on behalf of its clients,” he says.
The unlisted fund has a low correlation to financial markets and experiences less volatility than the listed sector. This makes the fund suitable for pension funds seeking consistent, long-term, risk-adjusted returns for their members.
“People will always need to buy food, clothing and household items and have access to key services,” says Rambhai. “Our shopping centres cater for these basic needs, and because they are conveniently located close to transport nodes, consumers are likely to continue spending their time and money here.”
New property managers were appointed in 2015 and have been able to extract better value from the properties, which is demonstrated by the fund’s outstanding performance over the last two years.
The fund currently owns 18 shopping centres across South Africa and has delivered significant social benefits to the surrounding communities.
BUILD ME AN ARCH Diepsloot Mall in Johannesburg
BRIDGE THE GAP Bridge City Mall in KwaMashu