Win­ners and losers

Mar­ket dar­lings not nec­es­sar­ily best per­form­ing port­fo­lios

Finweek English Edition - - Companies & Markets - JOAN MULLER joanm@fin­week.co.za

PROP­ERTY STOCKS HAVE STAGED a re­mark­able come­back over the past six weeks, with the in­dex up 26% be­tween 3 July and last Wed­nes­day (13 Au­gust). Fig­ures re­leased by Cat­a­lyst Fund Man­agers last week show that in July alone the listed prop­erty in­dex re­gained 18% of its losses. That brings the to­tal av­er­age re­turn for the year-to-date (Jan­uary to July) to -15,42%.

In terms of the per­for­mance of in­di­vid­ual coun­ters, Cat­a­lyst fig­ures show the top five prop­erty stocks for the Jan­uary to July pe­riod are: Am­bit Prop­er­ties, with a to­tal re­turn of -2,96%, fol­lowed by Vuk­ile Prop­erty Fund (-7,62%), Cap­i­tal prop­erty Fund (-7,97%) and ApexHi A and B (both at -9,7%). The five worst per­form­ing stocks over the same pe­riod are: Madi­son Prop­erty Fund Man­agers (-34,67%), Monyetla Prop­erty Fund (-30,55%), Oc­todec In­vest­ments (-24,85%), SA Cor­po­rate Real Es­tate Fund (-24,16%) and Pre­mium Prop­er­ties (-22,13%).

How­ever, in­dus­try play­ers say it’s be­com­ing in­creas­ingly im­por­tant for in­vestors to fo­cus on the qual­ity of un­der­ly­ing prop­erty port­fo­lios and not only on stock mar­ket per­for­mance. For ex­am­ple, in­vestors need to look at how much time and money man­age­ment spends on main­tain­ing its shop­ping cen­tres, of­fices and fac­to­ries to pro­tect fu­ture in­come streams. In other words, is man­age­ment sweat­ing as­sets to en­sure sus­tain­able growth or are they only chas­ing short-term per­for­mance?

The is­sue was re­cently raised by Frank Berke­ley, head of Ned­bank Cor­po­rate Prop­erty Fi­nance, who says in­vest­ment an­a­lysts have be­come too fo­cused on how quickly funds can grow in­come pay­outs (dis­tri­bu­tions). The mar­ket needs to start pay­ing more at­ten­tion to the longer-term growth po­ten­tial of in­di­vid­ual build­ing port­fo­lios, says Berke­ley.

The In­vest­ment Prop­erty Data­bank (IPD) di­rect prop­erty in­vest­ment awards pro­vide a use­ful bench­mark of listed prop­erty funds.

The 2008 re­sults, an­nounced last week, show the top three funds are Hyprop In­vest­ments (re­tail), Emira Prop­erty Fund (in­dus­trial) and Foun­tain­head Prop­erty Trust (of­fice). The awards are pre­sented for the high­est three-year an­nu­alised to­tal re­turn in each of the re­tail, of­fice and in­dus­trial sec­tors. To­tal re­turn is the over­all re­turn (in­come and cap­i­tal growth) achieved on cap­i­tal em­ployed. Hyprop’s re­tail port­fo­lio de­liv­ered a to­tal re­turn of 40,6% (com­pared with the listed fund bench­mark of 31,3%), Emira’s in­dus­trial port­fo­lio de­liv­ered to­tal re­turns of 43,2% (com­pared with the bench­mark of 33,6%) and Foun­tain­head’s of­fice port­fo­lio de­liv­ered to­tal re­turns of 42,3% (com­pared with a bench­mark of 27,9%).

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