Existing Liberty policy holders have until 31 October to invest in the soon to be listed Liberty Two Degrees Real Estate Investment Trust (REIT) via a new Liberty portfolio that will hold shares in Two Degrees.
“Liberty Two Degrees shares will be offered exclusively to institutional investors under the listing but the new Liberty portfolio, called the Liberty Real Estate Portfolio (LREP), is being given an exclusive but limited allocation of Two Degrees shares at a 5% discount to the listing price,” says David Lloyd, Managing Director of Innovation and Investments at Liberty.
Liberty Two Degrees will be managed by the same team within STANLIB that has managed the Liberty Property Portfolio for many years under the leadership of Amelia Beattie as the CEO.
Existing investors in the Liberty Property Portfolio, Liberty’s unlisted property portfolio, have the option to switch all or part of their portfolio into the new Liberty Real Estate Portfolio. The LREP will then receive the full amount requested of Liberty Two Degrees shares at a 5% discount to the listing price, subject to a maximum switch amount of R3 billion. This offer will be operated on a first come, first served basis.
All existing Liberty customers, including those invested in the Liberty Property Portfolio, also have an option to invest new funds in the LREP and receive the 5% discount on the listing price subject to a total limit of R1 billion on a first come first serve basis. Customers who do select to switch will do so at no cost and will still receive their annual investment bonus, just pro-rated.
Liberty has structured the new REIT so that on listing, it is expected to hold a portion of the portfolio, worth R6bn of the Liberty Property Portfolio, in the iconic and blue chip properties of Liberty’s existing property portfolio such as Sandton City, Melrose Arch and Eastgate plus a further R4bn in cash. “We’re expecting significant interest from our customers in both these offers at the 5% discount,” says Lloyd.
Lloyd adds that the way that this has been structured, whereby Two Degrees buys into a portion of the returns from the existing property portfolio, changes the way the properties are valued as it moves them from the Liberty life company balance sheet into the open market.
“We therefore expect the listing to increase the value of the existing property portfolio by between 3% to 5% and all existing Liberty customers invested in the Liberty Property Portfolio will see this once-off uplift in their holding when the REIT lists,” he adds – and this is whether they switch out into the new property portfolio or remain where they are.
“We are very excited about being able to provide our customers with a new type of property investment through the new Liberty Real Estate Portfolio however; we do recommend that customers currently invested in the Liberty Property Portfolio receive advice before making a decision to swap their investment for the Liberty Real Estate Portfolio. Although there is potentially more upside in being invested in a listed instrument, it does carry a higher risk profile and may not be appropriate for everyone,” says Lloyd, who adds that those customers preferring a more stable, lower risk return will have the option to remain in the unlisted Liberty Property Portfolio while still benefiting from the overall re-valuation of the property portfolio due to the listing.
Liberty is supporting this initiative with extensive assistance to its financial advisers so that they can suitably advise existing Liberty Property Portfolio customers on their options to switch or not.
