Challenge for property loan stock sector

Posted On Friday, 21 May 2004 02:00 Published by eProp Commercial Property News
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If funds in the listed property unit trust and property loan stock sectorwant to be rated as a preferred stock by asset managers, they need to deliverdistributable earnings growth in the region of 5%.


Angelique de RauvilleThis is the view of Angelique de Rauville, MD of asset management company Provest, part of thex.

De Rauville has adopted her stance on the back of similar or betterearnings growth being declared by many of the listed property funds andcompanies so far this year.

On Tuesday, property loan stock company Atlas Properties reported thatdistributions for the six months to March were 6,3% higher than the correspondingperiod last year. Earlier this year several other listed property fundsalso reported positive distributions.

Hyprop Investments reported a 7,7% increase in total distribution tounitholders for the year to December, while Growthpoint reported a 4,7%increase in interim distributions for the six months to December.

South African Retail Properties increased its distributions by 5,7%for the year ended March 31.

There have also been some exceptional performers, with Spearhead reportinga 21% increase in distributions for the six months ended December, and Premium Properties and Octodec Investments boosting their distributionsby 29,2% and 25% respectively.

De Rauville is expecting positive distribution announcements from MetboardProperties and Acucap Properties when they release their year-end resultsnext week.

She said listed property giants Sycom, Grayprop and Martprop's earningshad been fairly pedestrian over the past few years as they had taken theopportunity, in a suppressed rental market, to incur capital expenditureto refurbish and redevelop their properties.

"Most of these endeavours have been completed or are close to completion,and are expected to filter through to distributable earnings growth goingforward," she said.

De Rauville said the earnings growth of these properties was hardlycomparable to the "outperformance" from Premium, Octodec and Spearhead.These companies, she said, were investors, traders and developers comparedto property "blue chips" like Sycom, Hyprop, Growthpoint, Martprop andGrayprop which were essentially long-term property investors.

Anton de Goede, investment analyst at Catalyst Securities, says investorsmust assess if distribution growth is achieved only by low costs due tolower interest rates and profits from development activity which is favouredduring the bottom of the interest rate cycle.

Last modified on Tuesday, 13 May 2014 10:16

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