Listed property sector takes a breather

By Ian Anderson, chief investment officer at Grindrod Asset Management

South Africa’s listed property sector declined by 1% during the week ending 15 March 2013. This comes on the back of a 7% plus gain so far this year.

While prices were down by more than 2%, a number of companies went ex-dividend on Thursday 14 March 2013, contributing around 1% to the sector’s total return for the week. Sector heavyweight Growthpoint Properties was down almost 2%, while Sycom (-4.6%), Capital (-3.7%), Emira (-3.1%) and Fountainhead (-1.8%) all suffered large price declines.

During the week, Redefine withdrew its offer for Fountainhead’s property portfolio, opting instead to acquire units in Fountainhead in order to align the interests of the manager (Fountainhead’s management company is owned by Redefine) with the interests of unitholders.

Redefine acquired an 18% stake in Fountainhead in the open market, before offering Fountainhead unitholders 12.15 Hyprop units for every 100 Fountainhead units they held. Redefine announced on Friday that it had acquired more than 450 million units, representing 38.9% of Fountainhead’s units in issue. The purchase consideration of R4.239 billion was settled with a combination of cash, Hyprop units and Redefine units.

Redefine is confident that Growthpoint’s offer to acquire the Fountainhead property portfolio will now not succeed. Growthpoint responded by saying it was committed to engaging with Fountainhead’s Independent Committee and that Redefine’s actions were deliberately precluding Fountainhead’s unitholders from being able to consider the Growthpoint offer, which was higher than Redefine’s withdrawn offer. No announcements have been made by the Independent Committee of Fountainhead after Redefine withdrew its offer.

Vukile Property Fund announced an empowerment transaction that involved the sale to Vukile of a R1.4 billion property portfolio and investment in Vukile of R600 million by Encha Properties, a leading Level 1 BEE-rated black managed and black owned property company.

The current forward yield on the sector is 6.6%, which is attractive when added to the 7% or 8% per annum distribution growth expected from the sector over the next three years.…2/

Top 5 performers last week


Hospitality B

17.78%

Synergy B

14.58%

Vunani Prop

9.30%

Synergy A

3.67%

Vukile

3.30%

Source: Grindrod Asset Management

Bottom 5 performers last week


Growthpoint

-1.93%

Fortress A

-1.97%

Emira

-3.08%

Capital

-3.71%

Sycom

-4.58%

Source: Grindrod Asset Management

comments powered by Disqus