SA Listed Property Index records a 3.16% return for February 2015

Posted On Friday, 13 March 2015 10:51 Published by
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The SA Listed Property Index (J253) recorded a positive return of 3.16% for the month ended February 2015.

Paul Duncan Catalyst Fund Managers

The yield to maturity (YTM) on the Long Term Government Bond Index strengthened, to end at 7.62% (7.12% - 31 January 2015). The SA listed property historic yield ended the month at 6.07% (excludes Attacq and NEPI) (6.13% - 31 January 2015). The SA listed property sector historic rolled yield was trading at a premium spread of 1.55% to the Long term Government Bond yield to maturity at 28 February 2015 (0.99% - 31 January 2015. SA Equities recorded the highest total return (4.07%) of the four traditional asset classes in February 2015.

SA Listed Property (3.16%) and SA Cash (0.47%) and SA Bond (-2.77%) were the next best performing asset classes for the month. For the last 12 months SA Listed Property has recorded the highest total return (44.34%), followed by SA Equities (16.14%), SA Bonds (15.04%) and SA Cash (6.04%).  Real Estate fundamentals remain challenging, but strong capital markets and lower yields for longer will be supportive of listed real estate performance. In the short term, listed real estate returns are likely to take their direction from capital markets rather than real estate fundamentals. Over the long term, real estate fundamentals will drive performance.

The UBS Global Investors Index recorded a net total USD return of -1.32% in February. The best performing listed real estate market was Europe, which recorded a net total USD return of 4.65%. North America recorded the lowest net total USD return for February of -3.71%. Global listed real estate currently trades at an estimated forward FAD (Funds Available for Distribution) yield of 4.46%. This represents an attractive spread relative to the US risk free rate even if rates increase over time. 

The SA listed property sector trades at a historic yield of 6.07%. Assuming 12 months distribution growth of approximately 7.5%, the SA listed sector offers a forward yield of approximately 6.53%. 

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