BJM targets UK property market
30 June 2009
JSE-listed financial services group Barnard Jacobs Mellet (BJM) and Cornerstone Asset Management have launched an offshore property investment company, British Capital Property Investments, to capitalise on opportunities in the stricken UK property market.
BJM Private Client Services CEO Jan van Staden said in a statement last week that a combination of UK recessionary pressures, a bursting property bubble and weaker British pound had created an affordable, once-in-a-lifetime opportunity for South Africans.
According to the company, local investors could optimise current rand strength, hedge against future weakness, and exploit depressed prices for UK commercial property.
BJM and Cornerstone will jointly promote British Capital Property Investments, which will invest in directly held UK properties as well as some UK-listed property stocks, targeting commercial properties in the city of London and West End in particular.
Forex allowance
British Capital is registered in Guernsey, and will be listed on the Bermuda Stock Exchange. The offshore structure creates access to BJM's institutional asset swap capacity, meaning fund participation does not have to affect an investor's individual forex allowance.
The offer to subscribe for shares in British Capital opens in July, dependent on Bermuda listing approval, and is expected to close at the end of August 2009.
The company is structured to deliver a measure of income, but primary focus is the pursuit of capital appreciation, and will then begin buying selected income-producing assets with limited exposure to letting risk in the second half of the year.
Minimum investment is £10 000 (about R129 400) with an investment term of five years, with the possibility of a two-year extension.
Trends favour locals
According to Van Staden, the credit crunch has forced some high-profile funds to become forced sellers of prime properties to raise case and ensure compliance with the terms of loans from commercial lenders.
At transactional level, London prices were down 50% from their peak in July 2007, he said, though prices were beginning to firm, with a revival in the British property market expected by 2011.
"Our offer to investors and the projected commencement of our acquisition activities are timed to capitalise on a positive 'yield gap' while taking advantage of the anticipated property upturn," he said.
"For once, international trends favour South Africans."
SAinfo reporter
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