Flyt Hospitality Fund17th Oct 2019
A Section 12J opportunity via Anuva Investments
Initiated by SARS in 2009, Section 12J of the Income Tax Act is a tax incentive aimed at boosting business via investment into the venture capital sector. By stimulating new businesses in South Africa and, in turn, job opportunities, Section 12J essentially offers investors an immediate tax break via investment into a Section 12J Venture Capital Company (VCC).
Section 12J investments are popular among high-net-worth investors and professionals who have investable income, salary earners who would like a tax refund on annual PAYE, or directors looking to ease their tax burden on dividends paid. The deduction you can claim is the full amount you invest, which is why this has proved an exciting new asset class, attracting over R6bn since it was introduced.
About the Flyt Hospitality fund
When 12J hit our radar, we immediately pursued the structure as an option for our investors. We have researched, posed all the questions and considered all the scenarios, structures and options, and, as a result, together with the team at Anuva Investments, have created an exceptional investment product.
Remember, the purpose of Section 12J is to fund small- and medium-sized enterprises that are believed to have long-term growth potential, with the aim of stimulating economic growth and creating jobs, which is a top priority for us too! Our investment mandate is to invest in quality hospitality opportunities (we’re in that space already). Our strategy is to find outstanding opportunities in the property sector, good quality, strategically located hospitality properties with a focus on sectional-title serviced apartments and student accommodation.
Flyt Property Investment has a very exciting pipeline of projects. We’ve already structured our projects with the investor in mind and our developments come with a complete management solution and an experienced operator in place.
Now, with our Section 12J investment available via the Flyt Hospitality Fund, our investors (or buyers) can purchase a unit outright directly or they can opt for the section 12J version and take the tax break via the hospitality fund. The fund invests into the Flyt projects until fully subscribed and/or sold out, after which we do what we do best and go on the hunt for new opportunities.
The following projects are currently secured in Flyt’s pipeline. The fund invests into these properties until fully subscribed and/or the projects are sold out on the open market. Thereafter, the fund is mandated to invest into similar property opportunities subject to the approval of the Investment Committee and Board of Directors.
167 Main Road, Diep River, Cape Town
A brand new offering in Cape Town’s latest urban renewal zone.
Diep River is currently seeing rapid urban renewal and is expected to assume its place as a popular hub for new families and up-and-coming professionals. We are extremely excited to be introducing Eaton Square, our 4-storey, mixed-use project situated on Main Road, Diep River, to this area.
Diep River, Cape Town
42 sectional title units
42 parking bays
1 Retail unit & coffee shop
Value: R70 million
31 Heerengracht Street, Foreshore, Cape Town
A home-away-from home – fully serviced self-catering apartments, right in the nucleus of the Mother City’s new hotel-hub.
Cape Town’s Foreshore has seen a positive revival over the years and has become a sought-after area due to its rich history and ideal location. Situated between the landmark city centre and the modern Port of Cape Town, the area has recently piqued the interests and raised a few investment eyebrows, becoming a worthwhile opportunity for many.
Cape Town CBD
39 sectional title units
Retail unit & coffee shop
Value: R75 million
How it works
An investment in Flyt Hospitality Fund is more than just a tax break. We love the 12J incentive because we believe that it is an opportunity to participate in Government’s policy of job creation, all the while providing our investors with attractive returns and a viable exit strategy. For every R1million invested 4.1 jobs are created. Who wouldn’t want to be part of that growth?
In a nutshell:
- Minimum investment: R1Million
- Tax deduction: 100% of invested amount
- Period: 5 years
- Benchmark ROI: 11% pa
- Distributions: Zero during first 5 years, Quarterly after 5-year period
- Geared: Yes, up to 40% loan via Investec Private Bank
Finding a partner
We’re all about relationships at Flyt, and finding the right partner for the Section12J journey was an important project for us. We didn’t want to find a typical service provider, we were actively looking for a 12J partnership, someone to walk the road with us. Enter Anuva Investments, one of South Africa’s most respected and established Section 12J Funds and our partner at Flyt Hospitality.
Anuva ticked all the boxes for us:
- Launched in January 2015, Anuva is South Africa’s first Section 12J fund and an industry bench-mark
- Regulated by the Financial Sector Conduct Authority
- Registered with SARS as a VCC in terms of Section 12J of the Income Tax Act
- A respected authority on Section 12J investing
- A total return of 68% since inception, Anuva have an outstanding track record
Flyt Hospitality and the team at Anuva are involved in the investment process from the ground up. Opportunities are considered jointly and, once these are identified, Anuva do what they do best and that’s manage, administer and look after our investment, leaving us to we do what we do best: manage the development and management of the property asset.