A Property Unit Trust (PUT) is a portfolio of investment grade properties which date back to 1969 when two trusts were established and listed on the JSE Limited. Each portfolio is listed on the JSE under "Real Estate Investment Trusts",. A PUT generates value for the investor in two ways: through rental income of the properties in the portfolio, and through the appreciation in the values of these properties over time.

 

Investors in PUTs therefore get a share of the portfolio's rental income in the short term, while the value of the units themselves increase in the longer term, mainly because of the rising value of the properties in the portfolio.

 

PUTs are managed by experienced and reputable management companies, responsible both for the day-to-day operation of the properties and leases, and for the investment strategy of the trusts.

 

There are a number of common features between PUTs and the international Real Estate Investment Trusts, or REITs,, which include the distribution of income from the property investments in the form of net rental or an interest distribution, which is taxable in the investor’s hands; restrictions on the type of assets that the trust invests in (typically types of property investments); guidelines on the amount of income that needs to be distributed; and limitations on the level of debt on the balance sheet.

 

More recently, implementation by the JSE of the FTSE-JSE Africa Index series has resulted in a "Real Estate" sector which includes PUTs, Property Loan Stock companies (PLSs) as well as property holding and development companies, although the JSE continues to run a sub-index specifically for PUTs. With the recent promulgation of the Collective Investment Schemes Act, PUTs are technically collective investment schemes in property, but are still referred to as PUTs as the nature of the investment remains the same.

 

Today, the sector comprises six listed trusts, with a total market capitalisation of over R24-billion. The prices of listed PUTs are quoted on the JSE Limited (SA) and are published in the pages of most daily newspapers, under the "Real Estate" heading.