More Value in Sa's Listed Property

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04 Dec 2012

South Africa’s listed property sector finished November on a high, gaining 1.8 percent in the final week.

For the month of November, the sector gained 6.7 percent, comfortably outperforming both the equity (2.6 percent) and bond (0.9 percent) markets in South Africa.

For the month of November, the sector gained 6.7 percent, comfortably outperforming both the equity (2.6 percent) and bond (0.9 percent) markets in South Africa.

During the week, Arrowhead reported results for the year ended 30 September 2012 that exceeded management’s forecast by 2.2 percent.

The company expects distributions to grow by 10 percent in 2013, which means growth for the B units of 25 percent (the A units currently don’t participate in the income growth, but offer investors a yield in excess of 9 percent with little or no risk to the income stream).

Ascension Properties announced that unitholders had approved the acquisition of a portfolio of properties from Capital Property Fund, while Annuity Properties announced the successful placement of more than 92 million new units at an issue price of 520c.

The R482 million Annuity raised will be used to partly fund acquisitions totalling R817.2 million.

At the end of November, the listed property sector was trading on a forward yield of 6.7 percent, which is in line with the yield on the R208 government bond (maturing in 2021).

However, listed property distribution growth is expected to average between 6 and 8 percent per annum over the next three to five years, suggesting there is significantly more value in the listed property sector than in the South African bond market.

Top five performers for the week ending 30 November

Hospitality B

9.38%

Premium

8.82%

Synergy B

7.97%

Arrowhead B

6.12%

Redefine

5.87%

Source: Grindrod Asset Management

Bottom five performers for the week ending 30 November

Annuity

-0.18%

Vukile

-0.44%

SA Corporate

-0.79%

Growthpoint

-0.81%

Emira

-0.85%

Source: Grindrod Asset Management

About the Author
Ian Anderson

Ian Anderson

Ian Anderson is the chief investment officer at Grindrod Asset Management.

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