SA Listed Property Index records highest total returns in March 2013

Posted On Tuesday, 09 April 2013 11:29 Published by Commercial Property News
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The SA Listed Property Index recorded a total return of 3.28% in March 2013.

The Property Loan Stock Index (J256) and Property Unit Trust Index (J255) recorded returns of 2.77% and 4.36% respectively over the same period. The yield to maturity (YTM) on the Long Term Government Bond Index ended the month at 6.91% (6.81% - 28th February 2013). The historic yield of the sector ended the month at 6.23% (6.36% - 28th February 2013).

Asset Class               MTD            YTD            12 Months
SA Listed Property    3.28%         9.14%         37.28%
Equities                   1.19%         2.48%         22.47%
Cash                       0.39%          1.21%         5.37%
Bonds                     0.18%          0.91%        14.38%

SA Listed Property recorded the highest total return (3.28%) of the four traditional asset classes for March. SA Equities (1.19%) and SA Cash (0.39%) were the next best performing asset classes for the month. For the last 12 months SA Listed Property, as an asset class, has recorded the highest total return (37.28%), followed by SA Equities (22.47%), SA Bonds (14.38%) and Cash (5.37%).

During the month the Chairman of the Independent Committee of Fountainhead received a letter from Redefine Properties Ltd advising of its decision to withdraw its proposal to acquire the assets of Fountainhead and informing the Independent Committee that it has acquired approximately 18% of the Fountainhead units, making it the largest Fountainhead unitholder.

In addition, Redefine, on an accelerated basis, offered to acquire further Fountainhead units on the following basis: 

  • Redefine would acquire up to 175 million additional Fountainhead units (in tranches of not less than 1 million) in return for 12.15 Hyprop units for every 100

Fountainhead units sold; Fountainhead units will be accepted on a first come first served basis Post this offer by Redefine, their stake in Fountainhead
increased to 45.6%.

Thereafter, the Fountainhead Independent Committee resolved to terminate its engagement with Growthpoint in relation to the Growthpoint proposal. The principal reason for this decision was that Redefine had indicated that it will vote against any resolutions or ballot of unitholders to approve the Growthpoint Proposal. The Independent Committee was advised that Redefine’s stake of 45.6% constitutes an effective blocking stake in respect of the Growthpoint Proposal unless (i) Redefine is precluded from voting its units in respect of a resolution to approve the Growthpoint Proposal, and (ii) the Growthpoint Proposal can be implemented without the need for a ballot to amend the trust deed of Fountainhead.

The other significant news released during the month was that Sycom and Hyprop concluded an agreement in terms of which, inter alia, Hyprop will acquire 100% of Somerset Mall from Sycom for a purchase consideration of R2.3 billion, which purchase consideration will be discharged by Hyprop transferring to Sycom 81,500,000 Sycom units (32.8% of the total Sycom units in issue) and the court application initiated by Hyprop against Sycom will be suspended.

As at the 31st March 2013 the historic rolled income yield of SA listed property was 6.23%. The risk to total returns in the short term is a weakening in capital markets and/ or deterioration in the income growth outlook. Listed property is a long term investment and over the long term the total return
from listed property will be driven by the income yield plus growth in that income.

Source: Catalyst Fund Managers

Last modified on Wednesday, 22 May 2013 21:23

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