Listed Property Companies report mixed bag results
South Africa’s listed property sector advanced 0.5% during the week ending 10 May 2013, as bond yields drifted higher and the Rand weakened against the US dollar, according to Ian Anderson, Chief Investment Officer at Grindrod Asset Management.
"Among the larger companies, both Redefine and Resilient gained more than 2%, Capital gained 1.7%, Hyprop declined by 0.5% and Growthpoint declined by 0.8%," he said.
During the past week, Delta Property Fund reported results for the year ended 28 February 2013 and declared its first distribution of 23.69c per unit, in line with expectations. The company has been extremely busy since listing in November last year, announcing transactions valued at R2.3 billion and completing a R1 billion rights offer. Management guided the market to expect a distribution of 72.5c per unit for the year ending 28 February 2014 and 86.85c per unit for the year ending 28 February 2015.
Arrowhead Properties reported interim results for the six months ended 31 March 2013. The distribution was 13.6% higher than in the comparable period last year, although management maintained guidance of 10% distribution growth for the year as a whole.
Management expects to complete a further R300 million of property acquisitions before the end of the year. Given current yields on property and Arrowhead’s cost of debt and equity, the acquisitions are likely to be earnings enhancing.
Fountainhead reported disappointing results for the six months ended 31 March 2013. The distribution of 26.11c per unit was 6.8% below the comparable period last year and significantly below the guidance given to the market at the end of the previous financial year.
Management blamed the reduction in distribution on a number of factors, most notably the advisory costs relating to the Growthpoint and Redefine proposals to acquire the assets of the trust. Excluding properties acquired or disposed of and properties under development, the property portfolio showed income growth of just 3.7%. Management expects the distribution for the full year to be marginally lower than for the comparable period last year.
To expedite a conversion to SA REIT status, Resilient Property Income Fund changed its year end to 30 June 2013 (companies can only apply for SA REIT status after their financial year end). Given the perceived and real benefits of being granted SA REIT status, it is anticipated that more companies will accelerate the conversion process by changing their year ends, but the market has probably priced in the benefits of the introductions of REITs in South Africa, given the current forward yield on the sector of 5.9%.
Resilient also announced that the distribution for the six months ended 30 June 2013 would be 12% higher than the comparable period last year. This was above market expectations and contributed to Resilient’s strong gains last week.
Top 5 performers for the week ending 10 May 2013
|
Hospitality B |
10.00% |
|
Redefine Intl |
5.59% |
|
Delta Prop |
5.08% |
|
Arrowhead B |
3.65% |
|
Sycom |
3.40% |
Bottom 5 performers for the week ending 10 May 2013
|
Fortress B |
-1.78% |
|
Hospitality A |
-2.42% |
|
Investec Prop |
-2.70% |
|
Vukile |
-2.77% |
|
Synergy A |
-9.91% |