Anuva Investments launch Section 12J hospitality fund with property partners Flyt Property Investment

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Anuva Investments, South Africa’s first Section 12J company, have announced the launch of a new fund available, allowing for diversification from traditional 12J private equity into the property sector via a hospitality fund created in partnership with Cape-based property developer Flyt Property Investment.

The 12J tax incentive introduced by SARS in 2009 was intended to stimulate growth in the SMME sector and ultimately lead to job creation. Historically these investments have been limited to venture capital and, in some cases, business rescue opportunities with traditional property investments not qualifying as VCCs. Investing in a qualifying 12J company requires that the company holds assets that qualify under the Act; the only property assets that qualify are those that create jobs in the hospitality sector, for example, hotels or managed accommodation properties.

The Flyt and Anuva partnership, launched as Flyt Hospitality Fund, will issues shares in selected qualifying property developments. Two Cape Town developments have been structured into the fund which issues shares giving the holder access to all the benefits of the property.  A minimum investment of R1million is required and can be made via private investor, trust, stokvel, investment syndicate or company. The investment is locked for a period of five years without any disbursements, after which shareholders can opt to remain in the structure and depending on performance, benefit from a passive income via quarterly dividend payouts.

Speaking at the launch of the fund, Zane De Decker, Managing Director of Flyt Property Investment, said: “Part of our success has been our ability to identify a good opportunity, so when 12 J hit our radar, we immediately pursued the structure as an option for our investors.”

He also quoted impressive statistics from The Western Cape Government, confirming that for every R1million invested in 12J structures, 4.1 jobs have been created in South Africa.   “It’s important for us to achieve returns in every sense. Not only do we want to achieve attractive financial yields, but it is also essential that we uplift local businesses, improve the built environment and facilitate positive progress in the areas we work in.”

Also at the launch was Neill Hobbs, CEO and founder of Anuva Investments, who said that their investment mandate with Flyt Property Investment is to invest in quality hospitality opportunities. “Together with the team at Flyt, our strategy is to find outstanding opportunities in the property sector: good quality, strategically located properties with a focus on sectional-title serviced apartments and student accommodation. We have worked closely with Zane De Decker and are optimistic at the potential this diversification will offer our investors.”

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WHAT IS SECTION 12

Section 12J of the Income Tax Act – the most efficient tax saving tool, provided by SARS and government that allows you to hold on to your tax cash while investing it wisely.

The section specifically aims to help the growth of small and medium sized businesses by increasing their access to equity finance. To attract investors into this typically under-funded sector, which is imperative for driving economic growth, SARS has written Section 12J into the Tax Act, which offers taxpayers a 100% tax deduction in the year of investment if they invest in SMMEs by way of subscription of shares in a Section 12J Venture Capital Company.

Flyt’s Section 12J compliant property developments give investors the full 12J tax deduction, allowing them to put this saving/refund towards their property purchase. This means that SARS will effectively fund up to 45% of the purchase price of the property.

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