Property trusts eclipse rivals

Posted On Wednesday, 03 December 2003 02:00 Published by
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THE property unit trust (PUT) sector has delivered pretax returns of 38,1% for the year to September, outperforming the all bond index

Property Reporter

THE property unit trust (PUT) sector has delivered pretax returns of 38,1% for the year to September, outperforming the all bond index, the financial and industrial index (Findi), and the all share index (Alsi).

The Association of Property Unit Trusts reported that the all bond index delivered pretax returns of 24,1%, the Findi 6,1% and the Alsi -2,0%.

Association chairman John Rainier said listed property had been recognised by the investment community for its consistent performance and the delivery of a secure, high and growing income stream.

Property unit trusts also continued to outperform competing asset classes over longer periods, with the sector delivering returns of 21,8% and 32,5% over three and five years respectively, compared to the all bond index (19,5% and 22,6%), the Findi

(-5,1% and 5,2%) and the Alsi (6,1% and 15,3%).

Rainier said property unit trusts in particular were less risky than other listed property vehicles, as they were more highly regulated. He said that this year property unit trust funds including Capital, Grayprop, Martprop, Prima and Sycom had delivered annualised returns of between 30,92% and 47,91%. In comparison, property loan stock companies were more volatile, delivering annualised returns of anything from -67,23% to 82,96%.

"This demonstrates that the returns of the various PUT funds are high and generally fairly consistent, which makes the sector appealing to investors who do not necessarily have a high level of property knowledge for appropriate stock picking," he said.

Angelique de Rauville, MD of listed asset management company Provest, which conducts monthly reports on the listed property sector, agreed. "Historically, property unit trusts have been limited in terms of gearing (borrowing capacity). Therefore the earnings and the company's performance were determined by property rentals and interest rates," she said.

However, looking ahead, De Rauville said the performance of property unit trusts would be more in line with property loan stocks because their borrowing capacity level had been raised to 30% of total assets.

Mariette Warner, head of fund management at Standard Bank Properties and manager of the Standard Bank Property Income Fund, said even though property unit trusts now had the capacity to borrow up to 30%, they had not taken it up.

Provest's latest monthly overview of the sector also showed that the listed property sector in general had a successful year. The report said that in the 12 months to December 1 the listed property portfolio rerated by 20,6%, while the Alsi gained 1,0%.

The market capitalisation of the sector also increased from R15,1bn to R23,9bn.

Dec 03 2003 07:19:33:000AM Nick Wilson Business Day 1st Edition


Publisher: Business Day
Source: Business Day

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