Because of the unique structure of the SA REIT asset class, there are two ways of beating inflation: capital investment growth and regular income distributions that grow.
By investing in SA REITs you are exposed to the best commercial properties in South Africa, and in some instances, offshore.
SA REITs have equity and bond characteristics. SA REITs offer investors the best of both worlds. A reoccurring cash distribution yield like a bond as well as growth in income like equity.
Your investment is underpinned by lease agreements with tenants in property assets. Importantly, most rentals escalate annually at around 8% on average in the current market, creating sustainable growth.
SA REITs are accessible to many investors and give everyone the opportunity to invest in incomeproducing commercial property. It is the easiest, quickest and safest way to invest in property.
The entry cost for a REIT investment is the price of a single share. Investors can also buy or sell shares in SA REITs at any time, without the costs and delays involved with physical property ownership.
Management of SA REITs are performancedriven and entrepreneurial. This means they are driven to get the best sustainable performance from property assets. Listed property has outperformed physical property due to professional focused management. Also, SA REIT investors don’t have the headache of managing the properties in which they are invested.
Because SA REITs earn income from property lease income that escalates each year, they have relatively predictable earnings. So you know what to expect from your investment with reasonable certainty.
SA REITs also provide a lower-risk property investment model because investors are exposed to a diversified portfolio of properties that are
actively managed by companies which have strict governance requirements.
The SA REIT is an effective diversification tool in an investment portfolio. Correlations with the broader equity market are low, at around 0.3%, therefore adding SA REITs to an equity portfolio will enhance return, for the same level
of portfolio volatility.
SA REITs should be included in a diversified investment portfolio.
If you are invested in SA REITs as part of your retirement annuity or pension, provident and preservation fund, you will pay no tax on your capital gains or distributions.
Playing an important role in the economy, SA REITs support growth by investing into real estate for communities.
They bring good governance, transparency and accountability to the real estate sector. SA REITs provide investors with regular statutory reporting and are subject to strict oversight.
SA REITs provide liquidity for real estate markets.