SA Listed Property Index recorded a 6.71% total return for September 2013

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SA Listed Property recorded the highest total return (6.71%) of the four traditional asset classes for September.

The SA Listed Property Index (J253) recorded a total return of +6.71% for September 2013. The yield to maturity (YTM) on the Long Term Government Bond Index strengthened in September and ended the month at 7.57 % (8.19% - 31st August 2013). SA listed property yields followed and the historic yield of the sector ended the month at 6.78% (7.14% - 31st August 2013).

The SA listed property sector historic rolled yield was trading at premium spread of 0.79% to the Long term government bond yield to maturity at the 30th September 2013 (vs. 1.05% at the end of 31st August 2013).

Asset Class

MTD

YTD

12
Months

 

SA Listed Property

6.71%

7.33%

10.28%

 

Equities

5.08%

15.07%

26.97%

 

Bonds

3.92%

0.51%

3.15%

 

Cash

0.43%

3.84%

5.21%

 

SA Listed Property recorded the highest total return (6.71%) of the four traditional asset classes for September. SA Equities (5.08%) and SA Bonds (3.92%) were the next best performing asset classes for the month. For the last 12 months SA Equity, as an asset class, has recorded the highest total return (26.97%), followed by SA Listed Property (10.28%), SA Cash (5.21 %) and SA Bonds (3.15%).

Andre StadlerOnce again capital markets were the big driver of returns for the asset class in September. Capital markets were strong driven largely by the ‘unexpected’ decision by the US Fed to maintain the status quo with its quantitative easing program.

US bond yields firmed on this decision and SA long term government bond yields followed suit. This was supportive of listed property share price performance. Significant news out of the SA listed property sector is the imminent initial capital offerings around three new listings.

Attacq, and Investec Australia Property Fund (IAPF) are likely to list on the main board in October and AfricaLand is likely to list slightly later in the year. Attacq is positioned as a capital growth play (due to its large development pipeline) with its most dominant asset (over time) likely to be Waterfall Estate, whereas IAPF will be an inward listing with approximately AUD134m worth of Australian office and logistic assets. AfricaLand is positioned to offer investors the risk and return profile of being exposed to real estate on the African continent (north of our borders).

According to Catalyst Fund Managers, all three of these opportunities provide interesting return opportunities but each have their own unique risks that need to be priced and considered respectively.

Catalyst Fund Managers remains cautious over the short term. This view is driven by expectations of continued capital market volatility, a challenging 5 year distribution growth outlook and the current historic rolled yield relative to bond spread. The current historic rolled yield of the SA listed property is 6.78%.

Assuming income growth of approximately 7.0% p.a. over the next 5 years, reinvestment of income, compounding and an exit historic yield of approximately 8.5% (to account for a more normalized capital market environment and sustainable ‘levered’ inflation-like income distribution growth outlook), listed property as an asset class has the ‘genetic’ ability deliver a 10% to 12% per annum total return.

Source: Catalyst Fund Managers

Last modified on Sunday, 13 October 2013 10:50

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