Favourable results boost SA's Listed Property Sector

Ian Anderson, chief investment officer at Grindrod Asset Management says South Africa’s listed property sector delivered 1.3% during the week ended 8 February, after both Resilient and New Europe Property Investments (NEPI) reported results last week

South Africa’s listed property sector delivered 1.3% growth during the week ended 8 February, after both Resilient and New Europe Property Investments (NEPI) reported results last week.

Giving an insight on listed property sector, Ian Anderson, chief investment officer at Grindrod Asset Management said Resilient reported distribution growth of 10.8% for the year ended 31 December 2012 which was slightly above market expectations.

Management’s guidance for 2013 would also have pleased investors as management expects distributions to grow by approximately 10% in 2013, despite the less than favourable economic backdrop. According to management, last year’s result was helped by an increase in turnover rental, the strong performance from property company New Europe Property Investments (NEPI) and a reduction in borrowing costs.

Resilient has committed R600m to an African joint venture with Standard Bank and Shoprite Checkers, and Resilient Africa has entered into memoranda of understanding with five Nigerian landowners.

NEPI’s results for the year ended 31 December 2012 were equally pleasing for investors, with management declaring a final distribution of 12.05 euro cents for 2012. Distributions for the year as a whole increased by 15% in euros and most analysts expect a similar level of distribution growth in each of the next three years.

NEPI’s share price increased by 3.5% last week, on the back of the results announcement, while Resilient’s share price gained just 0.8% despite the company’s pleasing numbers.

The market will now turn its attention to Growthpoint and Hyprop, with both companies expected to report later this month. Hyprop is expected to deliver distribution growth of approximately 7% for the year ended 31 December 2012, while Growthpoint’s interim results are expected to show the company is on track to deliver distribution growth of approximately 6.5% for the year ended 30 June 2013.

The forward yield on the sector has declined marginally to 6.7%, but there are still a number of smaller listed property companies offering forward yields in excess of 8%.

Top 5 performers for the week ended 8 February 2013

Bottom 5 performers for the week ended 8 February 2013

Source: Grindrod Asset Management