Business Day

Bonds sur­pass stel­lar per­for­mance of listed prop­erty sec­tor

- ALISTAIR AN­DER­SON Prop­erty Writer an­der­sona@bdlive.co.za Business · Investing · Travel · Cape Town · Nigeria · Montenegro · Serbia · Ghana · Pretoria · Tsogo Sun

THE listed prop­erty sec­tor has man­aged to out­per­form other eq­ui­ties but has been out­done by bonds dur­ing 2016 so far.

The re­cent fi­nan­cial re­port­ing pe­riod showed that dom­i­nant large shop­ping cen­tres were the most re­silient sub­sec­tor, while of­fices have strug­gled this year to date. In­dus­trial prop­erty is ex­pe­ri­enc­ing sim­i­lar head­winds to of­fices with re­gards to weak re­ver­sions but de­mand for good qual­ity, mod­ern lo­gis­tics fa­cil­i­ties re­mains.

For the first eight months of 2016, the SA Listed Prop­erty In­dex achieved a re­turn of 7.65%, ac­cord­ing to a re­port by Cat­a­lyst Fund Man­agers.

Other eq­ui­ties mus­tered 5.82%, cash man­aged 4.78% but bonds were the top as­set class with a re­turn of 11.72%.

Hos­pi­tal­ity Prop­erty Fund’s A and B shares were the best per­form­ers among the listed prop­erty stocks over the pe­riod, but this growth came off a low base. The com­pany, which had strug­gled fol­low­ing the 2010 Soc­cer World Cup tourism boom, has re­cently ben­e­fited from strong vis­i­tor num­bers es­pe­cially at its Western Cape­based ho­tels. Many Dutch, Bri­tish and Ger­man tourists have cho­sen to hol­i­day in SA be­cause of the weak rand.

Hos­pi­tal­ity’s dual share struc­ture is set to be con­verted into a sin­gle share set-up af­ter Tsogo Sun in­jects 10 ho­tels, val­ued at about R1.8bn, into Hos­pi­tal­ity, in ex­change for more than 50% of Hos­pi­tal­ity’s or­di­nary shares.

Hyprop In­vest­ments, a shop­ping cen­tre owner, also per­formed strongly, achiev­ing a to­tal re­turn of 27.48%.

Hyprop owns a num­ber of malls, such as Canal Walk Shop­ping Cen­tre in Cape Town and The Mall of Rose­bank in Jo­han­nes­burg. CEO Pi­eter Prinsloo said ear­lier in Septem­ber that var­i­ous fac­tors had con­trib­uted to strong growth in dis­tributable earn­ings in­clud­ing ad­di­tional in­come from ac­qui­si­tions in Nige­ria, Mon­tene­gro and Ser­bia, and the open­ing of the Achi­mota Re­tail Cen­tre in Ghana.

Rede­fine Prop­er­ties has also been a strong per­former this year, with a to­tal re­turn of 17.96%. Its per­for­mance has been buoyed by ac­qui­si­tion ac­tiv­ity and solid per­for­mances by its blue chip as­sets, such as Cen­tu­rion Mall in Pre­to­ria and Blue Route Mall in Cape Town.

SA Cor­po­rate Real Es­tate has also per­formed well year to date, hav­ing re­ported 9.1% dis­tri­bu­tion growth for the six months to June and achieved a to­tal re­turn of 18.51% for the eight months to Au­gust. The com­pany’s port­fo­lio’s core in­come has per­formed well.

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