TOMORROW sees the listing of Afine Investments on the JSE, a new real estate investment trust (Reit) that holds a portfolio of income-generating properties focused on the petroleum sector in four of the nine provinces.
In South Africa, petrol service station properties are controlled by the oil companies and a small group of petrol service station property owners. High property prices, complex legal structures, environmental legislation, licensing requirements, among other challenges, create high entry barriers for the ordinary man in the street to participate in a petrol service station property as an investment opportunity. The listing is in line with international trends where investors increasingly favour specialised Reit investments over generalised Reit companies.
Afine was founded by Peter Todd, with input from Mike Watters, both of whom are well known in the Reit space. Watters, formerly the chief executive of RDI Reit, will act as Afine’s chairperson. The company was created as a team effort with the management of Petroland Group.
Petroland was established in 1993 by Anton Loubser. It has developed more than 60 new petrol service stations in major metropolitan areas, as well as in rural areas. Loubser has been appointed as the chief executive of Afine.
Afine would afford ordinary property investors the opportunity to participate in the ownership of petrol service station properties. Although this type of Reit is already in operation on other stock exchanges all over the world, it will be the first of its kind in South Africa, and an opportunity for petrol service station property owners/ investors to participate in this new venture, the company said in a statement yesterday..
Watters said the main reason for REITs – to produce income – would be there forever. “People need income ... if you have an investment that gives you solid, stable and growing income, that will be what people want to invest in. Reits, I believe, will just get stronger, no matter all these fundamental issues around the world. You need scale, liquidity, good corporate governance and the right debt levels. If you meet those requirements, people will invest in you,” he said.
On the JSE other specialist Reits include in logistics (Equities Property Fund), self-storage (Stor-Age Property Reit), and multi-let industrials (Stenprop, Sirius Real Estate).
Watters said Afine’s objective was to consolidate ownership through a Reit structure, with an acquisition strategy to grow the business substantially over the next five to 10 years.
Bravura Corporate Finance Principle Llewelyn Gerber said the trend for specialised Reits was well known in the Australian and international listed markets.
“Specialised investments in the property sector, including investments in petrol service stations, are tapping into the interest from both investors and lenders. Even in a lockdown, petrol service stations offered solid opportunity – in the right locations of course,” Llewelyn said.
Professional services firm BDO Australia, in its 26th Annual Survey of Australian Reits, listed two Reits with mainly petrol service station assets in the 2020 top 10 Australian Reits.
Reits with petrol service station assets were riding out the pandemic shutdowns relatively unscathed – and some are even benefiting from the changes in the business environment, said Gerber.
Michelle Krastanov from AcaciaCap, who acted as the designated adviser on the listing, said Afine had secured long-term leases with oil majors that provided reliable and sustainable revenue, and it had also entered into an agreement with Petroland, one of South Africa’s major petrol station developers, in terms of which Petroland would provide strategic management services.
BUSINESS REPORT