The Tower Property Fund (Tower) is set to become the first company to list on the new real estate investment trust (Reit) structure of the JSE, next month.

The Spire Property Group, which manages a portfolio of over R4-billion for private clients, is launching Tower.

The fund’s R1.65-billion portfolio consists of 27 properties, including the Cape Quarter complex in Green Point, Cape Town, and a Green Building Council of South Africa (GBCSA) 5-Star Green Star SA-rated office complex on Grayston Drive, Sandton.

Its portfolio is made up of 30% retail and 70% offices, with 60% based in Gauteng, 31% in the Western Cape and a small component in KwaZulu-Natal. The company has further identified a potential pipeline of high-quality assets worth some R1.2-billion.

A portion of the portfolio comprises decentralised office properties, which Tower CEO Marc Edwards said provided diversified income streams and potentially higher rentals.

"Going forward, we will look to increase the percentage of retail to 50%, targeting mainly convenience centres, which we believe have excellent prospects, as there is an emerging trend of customers seeking local face-to-face services, while larger centres lose customers due to online shopping,” he commented.

Edwards added that the fund would focus strongly on the acquisition of 'green' properties, citing recent global research, which showed that green buildings significantly outperformed other buildings, achieving, on average, rental premiums of 6%, capital value improvement of 12%, and a 30% reduction in operating costs.

Tower executive director and GBCSA chair Bruce Kerswill added that, as the portfolio grew, the fund would seek to acquire further green-rated buildings, as well as advance the gradual greening of existing buildings in the portfolio.

“The initial focus will be on reducing energy consumption through no-cost or low-cost energy efficiency measures to reduce consumption and, therefore, total occupancy costs,” he said.

Kerswill added that the fund would enter the market with an attractive yield, good growth prospects, and a strong pipeline of future acquisitions.

“We have quality assets, a successful management track record, and a focus on competitive ‘greening’ strategies that differentiate us. We believe that Tower will prove to be an excellent investment,” he commented.