Strong growth from listed property

Posted On Thursday, 11 August 2005 02:00 Published by eProp Commercial Property News
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Two of the three listed property funds that posted financial results last week reported increases in their distributions of more than 10%.

Len van NiekerkAnalysts are expecting positive performances from other listed property funds that are due to publish results in the coming months.

Listed property loan stock company Resilient Property Income Fund, which has a large exposure to retail properties, reported a 12,25% surge in distributions for the six months to June, compared with the corresponding period last year, while listed property unit trust Capital Property Fund reported an 11,6% increase in its distributions for the six months ended June.

Listed property loan stock company ApexHi Properties also reported that distributions to holders of its B units increased 9%.

Property analyst Len van Niekerk said yesterday he was expecting average distribution increases of between 6,5% and 7% for the listed property sector each year over the next three years.

Van Niekerk said that since 2000 the average growth in distributions had been about 4% year on year.

He said the drivers of the growth included positive property fundamentals and an environment of low interest rates.

There were fewer vacancies and rising market rentals, especially in the retail and industrial property markets, he said.

Mariette Warner, head of property funds at Stanlib Asset Management, said she expected a "very wide divergence" in earnings growth from listed property funds because of the differing natures of the various property portfolios in the listed property sector.

"There are some that are very entrepreneurial, and these will deliver double-digit growth. Others benefit from cyclical markets."

She said industrial property was the strongest market currently, and this explained Capital’s positive results as it had a large industrial property portfolio.

"Then there are other portfolios that have undergone extensive refurbishment programmes and this benefited Resilient."

Warner said other property funds, such as Sycom and Grayprop, were busy with new developments, so growth would come through only in two to three years.

Several listed property funds were due to publish results in coming months, and Warner said she was expecting lower growth from the larger ones.

She said this was due to the fact that their portfolios were very large and it was more difficult for individual projects to contribute to much greater earnings growth.

Angelique de Rauville, MD of listed property portfolio management company Provest, said Provest was expecting a select few listed property stocks to outperform the market by producing double-digit earnings growth such as Capital and Resilient had done.

De Rauville said others that are expected to deliver double-digit growth included stocks such as Hyprop Investments, Redefine Income Fund, Acucap Properties and Spearhead Property Holdings.

"This trend will continue into next year, with a select few stocks continuing to deliver double-digit earnings growth."

De Rauville said Provest expected average distribution growth to come in at 8% for the whole sector this calendar year, and similar growth was expected next year.


Last modified on Tuesday, 06 May 2014 15:17

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