Be an international landlord

The purpose of the piece was to highlight that there are other options when it comes to investing in property.

Even if you already own an investment property, listed stock is a great way to diversify your “portfolio”.

Simply put, if you spread your risk between residential as well as commercial property, you stand a better chance of making it through the lean times in the property market, when certain real segments of the market come under pressure.

Listed stock also allows you to diversify across economies, whereby you are able to have exposure to offshore markets where the property market may be more resilient that locally, for example.

Let’s get real

This week I would like to get a little more specific, to highlight an example.

I’d like to emphasise the points I made last week by using a relevant and practical example.

I have decided to talk about a particular listed property stock that embodies the benefits I have been harping on.

The company I am talking about is called Capital and County or Capco.

Own 3.7 million square feet of prime retail and commercial property in London

Capital and Counties Properties PLC (Capco) is a property company with assets focused on Earls Court and Covent Garden, in London’s affluent West End.

Capco is listed on the London Stock Exchange, with a secondary listing on our very own JSE.

That means you can buy it.

That also means you can own your share of prime, high end property in the UK.

Capco PLC is one of the largest investment and development property companies that specialises in central London real estate.

They hold around 3.7 million square feet of assets valued at just under £3-billion.

Their tenants range from restaurants, accommodation and fashion stores, to hospitality and conferencing in the most affluent parts of town.

Beauty brands Clinique and Bobbi Brown and fashion labels Stefanel and Claudie Pierlot are just some of the new retailers that have opened recently.

Good tenants means good rentals.

Benefits of owning the stock

Capco also pays a dividend twice a year to shareholders.

So, as an investor, you benefit not only from the share price performance, but also from the profits they generate.

The other advantage, of course, is that they earn their income in Pounds Sterling.

Their share price and dividend calculations is based on the prevailing exchange rate.

Historically low interest rates

Interest rates in the UK are extremely low at the moment, which makes investing in property a very attractive investment.

This environment makes it possible for Capco to finance property developments and expansion projects at a lower cost.

By doing so, their (your) portfolio value grows with each piece of real estate they add.

Property companies are valued by the value of the assets they hold, so when their asset values increase so does the value of your stock.

To me, having some offshore property exposure is a no brainer and, you have to admit, it’s a pretty clever way of investing in property over the “plain vanilla” residential market and, besides, I quite like the thought of being an international landlord.

This company is just one example of the advantages of investing in listed property and my aim here is to promote a little “out the box” thinking when it comes to your investment decisions.

Have a question or suggestion for Robby P’s next topic? Send these to benonicitytimes@caxton.co.za.