Two specialised small and medium enterprise (SME) funds for the property sector were launched by Business Partners Limited this week and are aimed at driving property ownership and enabling entrepreneurs to grow their equity base.
Speaking at the launch in Johannesburg, Nazeem Martin, MD at Business Partners, said that despite South Africa’s economic challenges, the local commercial property market continues to offer value for potential investors, and in particular, entrepreneurs.
It is anticipated that quality commercial and industrial properties in the country will continue to boast risk adjusted yields above most other investment classes in the near future. “We therefore believe that commercial and industrial property remains an attractive investment for entrepreneurs, either as a sound long-term investment or to secure tenure for their own business operations.”
The Business Partners Property Fund makes R200 million available to provide affordable finance for SMEs across all industries, allowing business owners to purchase and/or refinance their own business premises. No deposit is required for this type of funding, and the Fund will offer 100% financing to qualifying businesses.
“Generally, conventional financiers require a cash deposit before financing a property deal. The Property Fund will cater to entrepreneurs with viable operating businesses, in existence for over three years, who wish to purchase their own premises but who have limited capital or security to contribute, or who do not want to compromise their business’ cash resources for the deposit.”
Martin says that calculations show that by purchasing property for a business premises, business owners can save up to 50% on premises costs over a 10-year period, without compromising the business’ cash resources.
The R250 million Business Partners Joint Venture Property Fund will provide equity or term finance, or a combination of both, for the purchase of a multi tenanted commercial, industrial or retail property valued between R2m and R120m.
Property investments in risk adjusted good locations – those offering good growth and/or return on investment, preferably in metropolitan areas – will be considered for this fund, and property investors are able to play an active role in managing the investment, but can also choose to be a passive investor. The Fund will also consider a viable property investment that has been over-geared and requires a restructuring of the existing debt, converting from a debt to equity finance model.
“Business Partners Limited has extensive experience in dealing with Joint Venture partners’ specific needs, and has a proven track record in maintaining successful and well managed partnerships.”
Martin says that the specialised funds form part of the company’s square peg movement – a campaign aimed at providing further funding, support and mentorship for entrepreneurs with the aim to unleash South Africa’s SMEs. The campaign, launched in September 2014, will see the company introduce a series of specialised funds, each focusing on the upliftment of a particular local sector. To date, a R300 million Manufacturing Fund and a R150 million Education Fund have been launched.
“With the launch of these new funds, we seek to achieve a greater developmental impact in the local SME sector. This is to ensure that local entrepreneurs are able to play their rightful role of generating wealth, growing the economy and creating jobs,” concludes Martin.