Freedom Property Fund expects to list on the JSE in the next few weeks, debuting an initial market capitalisation of R1-billion and a diverse property portfolio of R1.56-billion, taking advantage of investors' limited access to the listed residential property industry in South Africa.

Freedom CEO Tyrone Govender said in a statement on Tuesday that the company was established to provide a platform for property owners and developers to unlock the value in their development projects. “With access to funding becoming increasingly challenging to secure in the current economic environment, it is Freedom’s strategy to provide a vehicle through which property owners can secure the necessary development funding.”

Govender explained that Freedom’s listing would provide a significant base for the company to achieve its phased approach to growth and raise new funding to progress its growth strategy.

He pointed out that Freedom’s focus on long-term sustainable capital growth differentiated it from investments such as real estate investment trusts (REITs), which mainly focused on income distribution. This made the fund a defensive investment relative to REITs in the current property cycle.

“Freedom will deliver long-term sustainable capital growth by unlocking the opportunities in its immediate and long-term development pipeline,” said Govender, forecasting the identified pipeline for acquisition and development to be significant over the next three to five years and promising to deliver significantly higher capital growth.

He said the company had a long-term view to investing in South Africa and, eventually, the rest of Africa. “We see incredible potential for growth with proven demand for the product we are launching.”

On listing, Freedom’s gearing would be less than 3% and its net asset value a share would be around 35% greater than the issue price of a Freedom share.

“The discount [represented by] the listing share price, offers unique market prospects,” noted Govender, stating that Freedom would unlock sustainable value and growth prospects for shareholders by capitalising on the largely ungeared value in its property portfolio. “We will do this by securing reasonably priced debt funding to develop a substantial portfolio of income-generating assets.”

In 2012, with the aim of listing on the JSE, the company began identifying viable properties and projects with prospects in areas with “proven, sustainable demand”, which required a platform to secure the capital and property expertise necessary to optimise development potential and unlock value. The vendors of these properties became Freedom’s first investors.

Freedom’s assets currently comprise income-yielding properties and developments across the office, industrial and residential property sectors. Its yielding properties include Steelpoort Industrial Park, in Limpopo, Wespark Palms, in the Free State, and Stellenbosch Industrial, in the Western Cape. This is complemented by a secured pipeline of five commercial developments, nine residential rental property developments and two residential sale property developments, as well as a long-term development pipeline in decentralised areas throughout South Africa.

Govender added that Freedom’s residential portfolio would span a variety of structures and markets from student rental accommodation to housing on head-lease to mines.

Freedom would be listed on the JSE main board under the Real Estate Holdings and Development sector.