Rate expectations boost interest in Listed Property

Posted On Monday, 06 May 2013 16:49 Published by Commercial Property News
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The listed property sector has returned 18.8% for the year-to-date, significantly outperforming both the bond and equity markets (week ended 3 May 2013). 

Ian Anderson GrindrodSouth Africa's listed property sector advanced 2.4% during the week ending 3 May 2013, outperforming the local equity and bond markets which both returned 1.3%. The listed property sector has returned 18.8% for the year-to-date, significantly outperforming both the bond and equity markets.

It is becoming increasingly clear that investors are actively seeking out securities and asset classes that offer an acceptable level of income, given the fact that official interest rates are expected to stay lower for longer.

Last week, Redefine International reported a 29.7% decline in distributions for the six months ended 28 February 2013. The company has made significant progress in repositioning the portfolio and management reiterated that the company will seek an inward listing on the JSE Limited and convert to a UK REIT now that the UK Finance Bill 2012 has abolished the 2% entry charge.

Redefine Properties also reported results that were marginally above market expectations. The company announced a 7% increase in the interim distribution and guided for a similar level of growth for the full year.

The company has been extremely active. Property acquisitions totalled more than R1.5 billion, while development agreements totalling R1.6 billion were concluded subsequent to the reporting period. These developments have been pre-let and the development pipeline includes a further R1.7 billion, of which R1 billion is pre-let.

Disposals totalling more than R2.5 billion have been concluded, including 24 government tenanted office properties that will form the nucleus of a company to be listed on the JSE Limited.

Redefine's investment in Hyprop has been reduced to 11.4% as a part of the acquisition of a 45.6% stake in Fountainhead Property Trust. Redefine's current forward yield of 6.4% is the highest among the larger, more liquid listed property companies and compares very favourably with Growthpoint (forward yield of 5.2%), Resilient (4.8%) and Hyprop (5.4%).

Among the smaller listed property companies, Vunani Property Investment Fund announced the company would be undertaking a rights offer to raise up to R760 million. This would fund the acquisition of properties in Greenstone Hill and settle debt incurred in the acquisition of properties.

Top 5 performers for the week ending 3 May 2013

Investec Prop

6.02%

Premium

5.00%

Redefine

4.69%

Delta Prop

4.12%

Fortress A

3.59%

 

Bottom 5 performers for the week ending 3 May 2013

Annuity

-0.51%

Hospitality A

-1.59%

Arrowhead A

-1.67%

Vividend

-1.82%

Hospitality B

-2.72%

Last modified on Wednesday, 22 May 2013 21:23

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