Listed property stocks are doing well

While the commercial property market’s recovery is still stuttering along it seems that all is not doom and gloom for the overall property market as South Africa’s listed property sector seems to be continuing its recovery, with property stocks outperforming most other stocks on the stock exchange.

This is according to Org Geldenhuys, managing director of property development and marketing company, Abacus DIVISIONS, who said there seems to be a “sustained strong performance” from a slew of property stocks, making this sector a “good place to invest in”.

“If the property market does start recovering, the listed property market is likely to perform even better,” he said.

This week listed property loan stock company Synergy Income Fund delivered total returns of 27,7% and 27,5% for its A- and B-linked unit holders last year. Synergy A- and B-linked units outperformed South African bonds and cash – and the fund was well-placed to produce growth in income distributions, market watchers said.

Meanwhile ARROWHEAD Properties, which listed on the JSE last year, reported in the press this week that it had made significant progress during the past few months and was positioned to grow its portfolio over the next few months thanks to an acquisition strategy. The company is looking to grow its portfolio by R660m, or 30%, in its current financial year. ARROWHEAD is aiming to increase its portfolio to R10 billion by 2016 through the acquisition of secondary properties that it believes offers attractive yields. But it seems that property companies are not just talking – they are also “showing”, said Geldenhuys. And this is made evident in the results being produced.

ARROWHEAD, which pays distributions to shareholders on a quarterly basis, expected to achieve an increase of 10% in distributions to R11,1 per combined A-linked and B-linked units for the year ended September 2013 – equated to 60c for the A units and 50c for the B units. For the period ended September last year the A and B units achieved a total return of 40,6% above the market average of 33,2%

ARROWHEAD was established through the unbundling of a portfolio of 98 properties from Redefine Properties in 2011.

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