Listed property sector takes a small breather

Posted On Monday, 15 May 2006 02:00 Published by eProp Commercial Property News
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SA's listed property sector, which has been booming for more than three years, pulled back a little last month, posting a slightly negative total return of -0,79%, said Catalyst Fund Managers.

Andre StadlerAndre Stadler, MD of Catalyst Fund Managers, which issues monthly reports on the listed property sector's total returns, said the "pullback" or weakening in the sector was due to profit taking in certain property stocks from some investors.

This had occurred mainly in the larger property stocks such as Grayprop and Growthpoint, which experienced downturns in total returns of 4,4% and 2,2% last month, respectively. Total returns include income growth and capital appreciation.

Catalyst Fund Managers said the property loan stock sector had recorded total returns of 1,72% last month, and the property unit trust sector had recorded a total return of -0,2%.

Stadler said the downturn in the listed property sector was transitory, with the sector having recovered from those levels. The total SA Listed Property Index was up 1,5% in terms of total returns so far this month. Larger stocks such as Growthpoint and Grayprop had recovered.

"Growthpoint is back (to being) up 2,5% and Grayprop is up 1,25%," he said.

First South Securities property analyst Leon Allison said listed property sector returns had declined last month after a "very strong performance" in the first quarter to March. "A bit of a pullback off a high base was necessary," he said.

Catalyst said certain property stocks had delivered high total returns. The best was listed property loan stock company Resilient Property Income Fund, with a total return of 44,91%, followed by Freestone Property Holdings' 36,4%. Stadler said the movement in terms of total return for the two stocks had followed strong distribution growth.

Freestone announced a 17% increase in distributions for the six months to December, while Resilient's distributions for the six months to December were 18,3% ahead of the year-earlier period.

Catalyst said Octodec and Redefine had delivered strong distribution growth of 34,5% and 21%, respectively, for the six months to February.

Catalyst said with many listed funds delivering better-than-expected distribution growth and improving property fundamentals, expectation of distribution growth would drive performance for the rest of the year.


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