Unlocking optic fibre as an investment vehicle and opportunity

Background

The South African Real Estate Investment Trust (REIT) legislation was implemented in 2013.

• Click here to read more about Rhea Infras

The South African Income Tax Act (ITA) defines a REIT as a South African residential company whose shares are listed on a stock exchange as shares in a Real Estate Investment Trust.

Therefore, a REIT can be seen as a company that derives income from the ownership, trading, and development of income-producing real estate assets.

The South African Real Estate Investment Trust (SAREIT) Association is an umbrella body for all local REITs, and is focused on promoting the real estate sector as an attractive asset class.

Fibonacci Managers have partnered with GAIA Fund Managers and Rhea Infras to bring to the market the first dedicated optic fibre REIT in Africa.

GAIA Fibonacci Fibre REIT 1 was listed on the Cape Town Stock Exchange in December 2021 and has gone from strength to strength.

Benefits of a fibre REIT for investors:

• Portfolio diversification across a wide spectrum of fibre investments which reduce the risks and increase returns.
• Distributes a minimum of 75% of its taxable income to shareholders as a dividend on a bi-annual basis.
• Provides investors with access to professional fund- and operational managers who understand the fibre industry and can take advantage of opportunities in the market.
• Tax benefit – The South Africa Revenue Service (SARS) allows the REIT (in terms of section 25BB) an additional tax deduction for dividends equal to the REIT’s taxable income. In essence, the REIT does not pay taxes at a corporate level. The investors only pay taxes at the investors’ applicable tax rates for the ordinary income portion of the dividend.

There are several other financial and tax benefits that will be communicated to potential investors when necessary.

Key role players:

Fibonacci Managers and Rhea Infras are key role players in the optic fibre income-producing real estate development sector.

Fibonacci Managers is a specialised alternative investment manager that partners with the best asset managers to create value for investors focusing on the optic fibre sector.

After careful consideration, Fibonacci Managers approached Rhea Infras to assist in building and operating fibre assets and then selling the assets to the GAIA Fibonacci Fibre REIT 1 as a going concern.

The model to purchase assets as a going concern assisted the fund to avoid the participation in any construction risk and reduce the performance risk for potential investors to the minimum.

Rhea Infras is a South African company, focusing on the building, operating and transfer of fibre, tower, and power infrastructure.

Due to the Covid pandemic and people working from home, the fibre industry expanded exponentially in residential areas over the last two years.

This created the opportunity in 2022 for Fibonacci Managers and Rhea Infras to partner with the objective to create more synergy and to unlock greater investment opportunities and growth for investors.

Our strategic objective for the near future is to expand the current Fibre-to-the-Home investment pipeline by investing in Fibre-to-the-Business, backhaul infrastructure, data centres and undersea cables.

Partnering with Fibonacci Managers and Rhea Infras (“the Partners”) means construction companies have access to expert financial partners that know how to acquire the best type of funding.

Funders’ risk is mitigated by the expert management capabilities of the Partners in managing construction companies and by providing short- and long-term liquidity events by utilising the REIT as an investment vehicle.

For any interest in fibre investment technology development opportunities, contact Fibonacci Managers – Emcee Nell: [email protected] or Rhea Infras – Johannes Gouws: [email protected]

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Unlocking optic fibre as an investment vehicle and opportunity