What is a property loan stock?

Where do I find listed property quoted on the JSE?
Listed property companies are listed on the JSE under “Financials – Real Estate”.

What is a listed property company?
A listed property company derives its income from property and property related sources. A listed property fund is an income fund because it pays out almost all its income, while normal listed companies retain anything up to 80% of their income.

What is a property loan stock company?
Property loan stock companies invest solely in property. As with all other companies property loan stocks are subject to the Companies Act, JSE regulations and are governed by their own memorandum and articles of association.

The main difference between property loan stock companies and other companies is the method whereby the owners fund the company. When you purchase a linked unit in a property loan stock it is comprised of part share and part debenture (or loan).  The debenture (loan) portion of the linked unit earns interest at a variable rate. The interest comes from net income (after expenses), which the loan stock company achieves from rental streams from the properties in which the company invests.

Usually property loan stocks distribute all their revenue profits, mainly through debenture interest with the balance being paid out as a dividend. Distributions are paid as often as quarterly by several property loan stock companies, and at the very least twice during each fund’s financial year. These regular distributions provide a steady cash stream and are tax transparent.

The conditions and terms of the debentures, including rate of interest payable and repayment dates are governed by the debenture trust deed and independent trustees are appointed to look after the interests of debenture holders.