Liberty Holdings has announced its intention to list a portion of its premium property portfolio on the main board of the JSE as a Real Estate Investment Trust (REIT) towards the end of 2016.

The listed REIT, to be called Liberty Two Degrees, will have an anticipated net asset value of R10bn and will be managed by STANLIB.

The listing is subject to all necessary regulatory approvals.

Thabo Dloti, Group CEO of Liberty Holdings, said: “The JSE listing of our prestigious property portfolio will enhance the value proposition to Liberty’s customers and further improve the returns profile of this premier portfolio of properties.”

Liberty is looking to raise up to R4bn in new capital at listing.

Liberty will also offer existing policyholders an exclusive opportunity to switch up to R3bn of their current direct property holding into a new property portfolio that will invest in the listed entity.

The REIT will have the ability to borrow and raise equity to create further growth opportunities and enhance returns for its shareholders.

“The capital raise will enable Liberty to expand and enhance its existing portfolio of quality property assets in South Africa and sub-Saharan Africa, gain access to a far wider investor community, and significantly add to the dynamics of the listed property sector of the JSE,” said Dloti.

“This initiative further enhances Liberty’s reputation in property investment and demonstrates our ability to innovate and create an exciting investment opportunity for our customers and investor community at large,” he added.

On a successful listing of the REIT, Liberty expects the Liberty Property Portfolio to increase in value by between 3% and 5%.

The listing will also support expansion of and enhancements to the existing property assets, and broaden their accessibility to a wider investment community.

Liberty Two Degrees will be, managed by the same team within STANLIB that has managed the Liberty Property Portfolio for many years under the leadership of Amelia Beattie as the CEO.

According to Beattie, the REIT has a substantial pipeline of investment opportunities and new developments to grow the portfolio within South Africa and invest in select properties in growing sub-Saharan African countries, predominantly with a retail bias.

“We have the track record and expertise to do this. For us Liberty Two Degrees will be a property fund that sees things differently,” she said.

The concept of a REIT is gaining momentum with some R400bn of equity in REIT’s now listed on the JSE.

A REIT is highly tax-efficient, price transparent and well regulated, and offers investors exposure to real estate properties through a JSE-listed instrument.

Listed property has for the last 20 years been a leading South African asset class performer, with average annual total returns of 19%.

For the same period local equities delivered annual returns of 16%; local bonds 12%; and cash 9%.

Although Liberty Two Degrees will issue shares only to institutional investors on listing, Liberty has crafted an exclusive opportunity for its retail customers and financial advisers, by creating a new property portfolio – the Liberty Real Estate Portfolio – which will invest solely in shares of the listed Liberty Two Degrees.

Dloti said: “Liberty's retail customers have benefited over the years from our property investment expertise; we anticipate that they will similarly be very excited about our new related retail offering when it is formally launched in September.”

Policyholders currently invested in the Liberty Property Portfolio can switch into the new portfolio on a limited basis, and those that elect to do so before the REIT lists will get preferential terms.

This new portfolio, with returns driven by the Liberty REIT shares, enhances its customer value proposition.

The existing Liberty Property Portfolio that has been core to Liberty’s property offering for many years will remain unchanged.

Liberty has appointed Standard Bank of South Africa and Java Capital as joint bookrunners and transaction advisers to the listing.

Liberty Holdings is a financial services group with a representation in 16 countries across the African continent.