South African investors have a unique opportunity to invest in the lucrative retirement living sector and enjoy the combined benefit of high potential returns and the significant tax deductions offered through a Section 12J investment.
The innovative opportunity has been created by Hospitality Investment Manager, Lucid Ventures, which was founded by Gidon Novick and Leor Atie. Novick recently the co-founded the new airline, LIFT.
According to Atie, investors in the Lucid 12J Retirement Living Fund (‘Lucid’), not only get to take advantage of the generous tax breaks offered by Section 12J, but also stand to benefit from the security of an investment with a robust real estate underpin.
“Increasing longevity, changing retirement lifestyle expectations and increasing demand for quality retirement options have meant that the South African retirement living industry has evolved into a highly compelling investment opportunity in recent years,” Atie explains, “and given that there are currently over 5 million South Africans over the age of 60, and this number is expected to grow to around 9 million by 2040, the demand for high-end, lifestyle oriented retirement living spaces is set to explode.”
The fund’s focus is on developing and operating premium retirement living facilities to meet this growing demand and, according to Atie, prime land parcels for the first developments have been secured in the sought-after areas of Houghton and Rosebank in Johannesburg. Lucid has also curated an expert, and highly experienced team to manage all aspects of the investment including project design, construction and ongoing operations management. Andrew Kuming of Kuming and Staples who is a successful residential property developer, forms part of the team, along with Silverage Retirement Solutions, a company founded by experienced retirement living operators Michael Sieff and Corene Breedt who are the operating partners to the venture.
Similar to the way Lucid has redefined the boutique hotel space in South Africa with its #1 Tripadvisor rated Home Suite Hotels brand, Lucid Retirement has a unique approach to retirement lifestyle creation. “Until now, most South Africans approaching retirement have had to be satisfied with dated living facilities, often in outlying areas, a highly institutional and impersonal approach to care, and having to move between living spaces as they age and their needs change” Novick explains, “ but Lucid Retirement Living turns this paradigm on its head, offering modern, digitally advanced, and centrally located facilities, with a hospitality approach to care and the opportunity to live in the same unit for life.”
He says that this modern, highly personalised retirement living approach is a very appealing prospect for retirees, or those seeking retirement facilities for their family, and that this, combined with the significant tax benefits of the 12J investment structure, makes the fund a significant growth and portfolio diversification opportunity.
“The Fund will target an after-tax return of at least 20% for those who invest at the marginal tax rate for the full five-year term,” Atie says, “and while this is first and foremost a long-term capital growth opportunity for discerning investors, participants in the fund will also have the option of securing a retirement solution for themselves or their loved ones via preferential access to a life rights arrangement.”
The first investment tranche closes on 26 February 2021, and is open to investments of between R1 million and R2,5 million. The opening of the second tranche, with the same investment limits, will be announced after February, and the fund will close for investments on 30 June 2021.
The investment term is five years and exit liquidity is provided through the sale of life rights to long-term residents in the retirement lifestyle facilities the fund will finance. Investors will also have the opportunity to convert their shares in the Lucid 12J Retirement Living Fund to life rights for themselves or their retirement-age family members.
For more information about the Section 12J Lucid Retirement Living Fund, or to apply to invest, call Sara Reynolds on +27 21 300 6189, email firstname.lastname@example.org, or visit www.lucidventures.co.za.