Scope remains for large new property listings

Posted On Wednesday, 14 July 2004 02:00 Published by eProp Commercial Property News
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Although some property commentators have expressed doubt about significant new listings coming to market in the next year, others have not ruled themout, saying there may be scope for one or two on the JSE Securities Exchange SA.

Angelique de Rauville

Last week, Des de Beer, MD of Resilient Property Income Fund, said he did not see any significant new listings coming on to the market in the next 12 months.

Even established funds had limited scope to enlarge their property portfolios and provide the market with new tradable units, he said, because of a shortage of fixed properties, and the fact that those that were available were expensive.

But Angelique de Rauville, MD of listed property portfolio management company Provest, part of the Investec Property Group, said yesterday she believed there was scope for at least one new listing, and possibly a second, in the next 12 months.

She said the market was in the initial stages of a trend by which pension funds, parastatals, government and even large companies wanted to unlock value by listing their large property portfolios.

De Rauville said listed property was trading at a premium to net asset value at a 15% premium based on funds' stated net asset value but that most new listings were brought to the market at or about net asset value.This gave scope for the price of newly listed units to rise, she said.

But she said the recent firming of the fixed property market had not yet filtered through to the stated net asset value of the listed sector. Provest's view was that listed property was trading at a premium to net asset value closer to between 8% and 10%, De Rauville said.

John Rainier, the outgoing chairman of the Association of Property Unit Trusts and MD of property unit trust Grayprop, also did not rule out new listings, saying people took property portfolios and listed them to obtain liquidity and raise capital, meaning there was still demand.

Rainier said that when Allan Gray Property Investments , which was later merged with Grayprop, was listed in the late 1990s, listed property was trading at an 8% discount to physical property. "Even if listed property is trading at a discount to physical property, there may well be a casewhere people want to list their properties because they need the liquidity and the auction pricing that listing gives."

Rainier was optimistic about the performance of listed property overthe next couple of years.

He said SA was in a structurally low inflationary environment which would see property yields coming down and unit prices going up.

Although he was specifically referring to listed property unit trusts,the same applied to listed property loan stock companies, he said.

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