Tak­ing stock

Financial Mail - Investors Monthly - - Opening Bell -

The di­ver­gent per­for­mance of the listed prop­erty sec­tor’s 50-odd coun­ters has in­creased to such an ex­tent that the share price gap be­tween the win­ning and los­ing coun­ters in the year to date (to March 19) has widened to a hefty 87%.

SA-fo­cused stocks have gen­er­ally out­per­formed their off­shore coun­ter­parts. This is in stark con­trast to 2017, when rand-hedge coun­ters were mak­ing the most money for prop­erty pun­ters.

Sec­tional ti­tle hous­ing de­vel­oper Bal­win Prop­er­ties has taken the lead in the year to date, with a share price gain of 24%. Other top per­form­ers in­clude lo­cal res­i­den­tial plays Ind­lu­place Prop­er­ties (20%) and Oc­todec In­vest­ments (14%), as well as re­tail-fo­cused Fair­vest Prop­erty (16%) and Emira Prop­erty Fund (14%).

The worst per­form­ing prop­erty stocks in­clude Fortress Reit (B), which has shed 63%, fol­lowed by Re­silient sta­ble mates Re­silient Reit (-57%), Green­bay Prop­er­ties (-48%) and Nepi Rock­cas­tle (-37%).

Panic sell­ing of Re­silient com­pa­nies has been fu­elled by ques­tions around the group’s cross-hold­ings, BEE struc­tures and the large pre­mium to NAV at which the stocks were pre­vi­ously trad­ing.

Rand-hedge coun­ters have been un­der pres­sure due to a stronger rand and lin­ger­ing Brexit con­cerns. No­table losers have been MAS Real Es­tate (-20%), Ham­mer­son (-19%) and Intu Prop­er­ties (-18%).

An­a­lysts ex­pect lo­cal prop­erty stocks to con­tinue to out­per­form over the next few months due to im­proved in­vestor sen­ti­ment, given SA’s chang­ing po­lit­i­cal cli­mate un­der Pres­i­dent Cyril Ramaphosa.

Bridge Fund Man­agers chief in­vest­ment of­fi­cer Ian An­der­son be­lieves lo­cal prop­erty stocks still of­fer plenty of up­side, de­spite the re­cent run in share prices. He says a num­ber of smaller and medium- sized com­pa­nies still trade at sub­stan­tial dis­counts to NAV, with yields ex­ceed­ing 10%. These in­clude Sa­fari In­vest­ments, which owns a high qual­ity port­fo­lio of township malls; Fair­vest, whose re­tail port­fo­lio also caters to lower-in­come shop­pers in high-growth nodes close to com­muter net­works; and Ind­lu­place, Oc­todec and Tower Prop­erty Fund.

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