New Old Mutual Property Fund beats industry benchmark
The Triangle Real Estate Core Fund, established by Old Mutual through unitisation of its R10,5 billion institutional property holdings, produced a total return of 29.4% for 2006, ahead of the Investment Property Databank industry benchmark of 26.7% for th
The fund is one of three to be launched on May 1 by Old Mutual Investment Group: Property Investments to provide steady, growing returns, primarily for the institutional pension and retirement fund market.
"The Triangle Real Estate Core Fund is well positioned to take advantage of the current positive property fundamentals," says Colin Young, head of institutional real estate for the group. "Support so far from large institutions has been overwhelming and prospects seem excellent."
The funds are a combination of unlisted, direct property, listed property and a small portion of cash.
Young says that Triangle diversifies away from other asset classes so that returns are highly correlated to the underlying property cycle.
"There will be tactical allocations to the various property sectors."
The introduction of the Triangle Real Estate Core, Development and Socially Responsible Investment (SRI) Funds means unit holders will have a stake in landmark Old Mutual properties across South Africa.
The properties range across the retail, commercial and industrial sectors. They include shopping centres such as Menlyn Park in Pretoria, Gateway Theatre of Shopping in Umhlanga and Cavendish Square in Cape Town, office towers like Safmarine House in Cape Town and industrial parks occupied by blue chip tenants in the major centres.
"The Triangle Funds have been structured to cater for both post - and pre -retirement needs," says Young.
"They offer quarterly liquidity and distributions and have attracted support from the largest public sector funds."
Young says existing commitments indicate Triangle will produce large cash inflows which will lead to further acquisitions of prime real estate as well as increase the group development pipeline. The Core Fund will have a first right of refusal to purchase all properties exiting the Development Fund.
He says introduction of the funds follows increasing demand for real estate, particularly in post-retirement annuity funds, as retirees grow in numbers.
"Real estate is a long-term inflation-hedge investment with a steady growing income stream. The combination of direct property, listed property and cash creates a powerful mix to meet the objective of improved liquidity, whilst ensuring returns reflect the underlying property cycle and not the volatile equities market.
"Because real estate generates an income distribution, it is, in contrast to bonds, the ideal investment for investors requiring a steady growing income. Given the huge increase in wealthy retirees worldwide, the real estate industry stands at the dawn of a new era of relevance."
