Low interest rates, reduced finance costs and the good performance of property in general have seen several companies delivering double-digit distribution growth in recent weeks.
Martprop, which is managed by Durban-based property group Marriott, blames its lacklustre performance on the fact that it had to reduce rentals on two separate properties because the leases on these properties had escalations above market rentals.
This is a reasonable explanation when viewed in isolation, but sister fund SA Retail Properties, also managed by Marriott, reported a marginal 1,4% increase in distributions for the six months to September last year.
At that time this was the weakest performance of a property fund so far that year.
The retail property-focused firm's poor performance was attributed to costs incurred fighting off the takeover bid of listed property loan stock Hyprop Investments. While these excuses are valid, there comes a time when investors get tired of excuses and want a solid performance.
Hopefully these poor results will prompt the management of these property funds to start delivering results in line with their peers in the sector.
Marriott, itself, will be injected with new life once the Old Mutual takeover of its property business is completed this year. In October Old Mutual Properties said it would acquire the Marriott group's property business, creating the largest property company in SA with R32 billion in assets under management. This may help Martprop deliver better results.
SA Retail could soon be owned by Hyprop Investments, one of the best-performing property funds on the JSE.
Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge
