The listed property historic yield for the 38 property companies, Catalyst Fund Managers report data on, ended the month at 5.78%. Excluding non-income distributors (Pivotal, Attacq) and 100% offshore earnings focused companies (New European Property Fund, Rockcastle, New Frontier, Capco, IntuProp, Mas, Sirius, StenProp, Redefine International and Investec Australia) the market cap weighted historic yield of the remaining companies is 6.44%.
| Asset Class | MTD | YTD | 12 months |
| Equities | 7.61% | 11.26% | 11.64% |
| SA Listed Property | 2.08% | 15.62% | 20.21% |
| Bonds | 1.30% | 4.00% | 4.85% |
| Cash | 0.52% | 5.31% | 6.39% |
SA Equities recorded the highest total return of 7.61% for the month. SA listed property (2.08%), SA Bonds (1.30%) and SA Cash (0.52%) were the next best performing asset classes. For the last 12 months SA Listed Property has recorded the highest total return (20.21%), followed by SA Equities (11.64%), SA Cash (6.39%) and SA Bonds (4.85%).
Listed property companies continued reporting results during the month. Rebosis Property Fund (11% Distribution Per Share “DPS” growth), Redefine International (1.16% DPS growth), Ascension ( A share – 5% DPS Growth , B share - 10.3% DPSgrowth) and New Frontier (New listing – maiden dividend of 3.05pence) all reported full year results for the period ended 31 August 2015. Delta and Equites reported interim DPS growth of 7.2% and 11.5% respectively for the 6 month period ended 31 August 2015.
The yield to maturity (YTM) on the Long Term Government Bond Index strengthened by 10bps to end the month at 8.34% (8.44% - 30th September 2015).
Specialist residential developer Balwin Properties listed on the main board during the month of October, following the completion of its R713m primary capital raised at a price of R9.88. In addition, R1.05bn was raised by way of a secondary placement by existing shareholders.
Stor-Age Property Fund, the largest self storage property fund focused on the fast growing self storage sector, is a potential new listing in the listed property sector . The company has gross property assets worth an estimate R1.3 billion representing a total GLA of 181,500m2. Stor-Age is seeking to raise approximately R700 million through a private placement and is anticipated to list on the JSE main board on the 16th of November 2015.
For some time now we have said that Real Estate fundamentals in South Africa are challenging and this has been further evidenced by the recent reported results and listed company management team’s softer outlook over the medium term. Local listed property players continue to diversify their portfolios offshore in an effort to access stronger real estate fundamentals and attractive yield versus interest cost spreads however we caution investors to focus on the long term prospects of the assets acquired and their ability to deliver sustainable growth.
We continue to maintain that in the short term, listed real estate pricing is likely to take its direction from capital markets rather than real estate fundamentals, earnings and earnings growth. Over the long term, real estate fundamentals, earnings and earnings growth will drive performance.
Source: Catalyst Fund Managers
