Bricks/mortar deliver the goods
Listed property proved its mettle as a strong defensive play, with my five 2010 stock picks delivering a total return of a not too shabby 32%. Fortress Income Fund (B units), the relatively new kid on the Resilient group’s real estate block, was the star performer in my portfolio with a total return of 56,29%. The market clearly likes the fact Fortress is an opportunistic player with an aggressive growth mandate. Last year’s share price rally appears to have been largely driven by faith in its management’s ability to unlock value for shareholders: the Resilient stable of funds – including Resilient Property Income Fund, Capital Property Fund and Pangbourne Properties – has a track record of sweating their assets.
Retail-focused Hyprop Investments, which owns mega-mall Canal Walk (Cape Town), Hyde Park and the Mall of Rosebank (Johannesburg) – was another solid performer, delivering a total return of 39,82%. Hyprop’s performance was no doubt underpinned by the proposed buyout of unlisted Attfund’s R9bn shopping centre portfolio announced in November last year. Resilient, with a large exposure to regional malls on the platteland, returned a respectable 34,07%, while Redefine Properties followed with 22,09%.
My 2010 portfolio performance was diluted by British shopping centre owner Liberty International, which had a tumultuous year on the back of its split in May into Capital Shopping Centres and London-focused Capital & Counties. Both counters didn’t quite live up to expectations, with a total combined return of just 6,48%.
Looking ahead, this year is probably not one for living dangerously so I’m making only minor changes to my existing portfolio. It’s unlikely SA’s listed property sector as a whole will again deliver 20% plus capital growth but, even so, property stocks still offer the prospect of steady and inflation-beating income growth (analysts expect distribution growth of 7% to 8% this year).
From a sectoral perspective, I think retail will outperform offices and industrials, so my portfolio will remain biased towards shopping centres. I’m keeping blue chip in my portfolio for 2011 for the third year running, as the counter will no doubt continue to deliver the goods, particularly in light of the Attfund acquisition that will add highly prized shopping centres, such as Clearwater Mall (Roodepoort) and Centurion Mall (Pretoria) to the portfolio. I’m sticking to
I reckon there’s still plenty of value to be unlocked following last year’s demerger. If the acquisition of the