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Forget about the end of Section 12J on Wednesday for a second, and consider the state of the market: Has there been a more attractive entry point in the past decade?
The 12Cape owned Latitude Aparthotel in Cape Town’s famed Atlantic Seaboard is proven, operational and has an average occupancy of 75% since opening in November 2019, despite COVID. 12Cape is un-geared and has cash available to invest in irreplaceable prime assets on the Atlantic Seaboard, all of which are sectionalised with an active open market. This attractive entry point into these prime assets stands to benefit from structural tailwinds:
(1) Permanent Remote Working trends is a game changer. Cape Town has already been voted a global favourite destination for remote work. The huge European workforce has few better options than swapping a cold winter for a sunny summer in the same time zone. In addition to an influx of working visitors from Gauteng, Europeans have already become repeat visitors at our Aparthotel, and will do so for years to come. The new North-South rugby championships will add further winter demand from European fans.
(2) Aparthotels is the fastest growing sub sector in hospitality accommodation globally, perfect for remote working and family holidays. Occupancy is currently north of 70% even though it is winter and the third wave.
(3) Prime Property on the Atlantic Seaboard has proven itself over decades as a store of value with inflation-beating returns over long periods. 12Cape does not take development risk and purchases completed assets at discounted bulk pricing with limited debt – a maximum of 15%. Looking to move to the Western Cape in future? Property prices keep rising and the capital outlay and time required to manage an investment property is onerous. An investment in 12Cape is not only tax deductible, but gives you a foot in the market.
(4) Diversification: With a big future component of income generated in hard currency from foreign visitors, the income stream is uncorrelated to SA Inc, and becomes more attractive when the rand weakens. Active foreign interest in assets along the Atlantic Seaboard also give the capital values a hard currency underpin. Jaap du Toit (Chairman) elaborates in this interview with Alec Hogg.
Enhance the entry point: Until Wednesday, investors can access this proven store of value at attractive current pricing in addition to the Section 12J tax deduction.
Deferred Payment Option: Secure your full deduction now, pay later: you fund 10% of your total investment before the 30th of June 2021, at least 30% on the 28th of February 2022, and the balance on the 28th of February 2023. No interest is charged on the deferred payments.
Governance: 12Cape is designed to compound over long periods. There is an exit mechanism for investors who want to do so after five years. The modularity of the portfolio is designed to facilitate this. The 12Cape investment team has decades of investment experience and are shareholders in 12Cape, along with many repeat investors who are also professional investors.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.