LONG-SUFFERING shareholders of Old Mutual-managed SA Corporate Real Estate Fund are no doubt chuffed the company finally appears to have turned the corner. The stock has been a perennial underperformer with little, if any, growth posted in income payouts over the past three years. So it came as a bit of a surprise when management recently reported a healthy 7,1% income growth for second half 2010 (yearon-year).
The stock’s improved growth performance has been primarily driven by increased demand and strong rental growth in its industrial portfolio. For the 12 months to end-December, industrial vacancies dropped from 6,1% to 2,9%, while rentals were up an impressive 13,7%.
SA Corporate’s poor performance over recent years was primarily blamed on its overexposure to smaller and mid-sized centres (below 35 000sq m), many of which are located in older, secondary areas. It also