Metope In The News

Diversified real estate group Dipula Income Fund is looking for merger and acquisition opportunities while share prices remain under pressure and smaller property firms struggle to compete in a slow economy. CEO Izak Petersen said the company, which released financial results for the six months to February on Monday, could take advantage of weak conditions in the listed property sector. Investment analyst Kelly Hook comments.

Income chasers who have in recent years become accustomed to receiving double-digit increases in dividend payouts will no doubt be disappointed by the lower growth numbers reported by real estate counters in recent weeks. Analysts expect dividend (often referred to as distribution) growth to slow to around 6% for the listed property sector as a whole this year. That is still slightly ahead of inflation, but noticeably down from the average 9% achieved by JSE-listed property stocks in 2017. Investment Analyst Kelly Hook comments.

Equites Property Fund, the SA and UK industrial real estate specialist, is rewarding investors who stuck with the stock since it listed nearly four years ago. The fund grew its distribution per share for the year to February 12.2% to 123.86c and its property portfolio expanded 30% from R6.2 bn to R8.1 bn over the same period, annual results showed on Thursday. Investment analyst Kelly Hook comments.  

Though there has been something of a recovery in property share prices in recent weeks after three months of negative returns, the sector is by and large still looking rather cheap. This is particularly true for property stocks that generate all or most of their earnings in SA, with at least a dozen local counters now trading at dividend yields north of 10%. That’s attractive compared with the average 6%-7% that income-dependent investors are getting on cash in the bank, or the just more than 8% on offer from government bonds. Investment Analyst Kelly Hook comments.

MAS Real Estate made its second acquisition in less than a week on Friday, buying two office buildings known as Princes Exchange and New Uberior House in Edinburgh, Scotland, for £71m. Through its subsidiary MAS (IOM) Holdings, MAS concluded a sale and purchase agreement to acquire the entire issued share capital of New Uberior House, which owns the two adjoining commercial buildings. Morné Wilken, CEO of MAS, said the acquisition of the grade A office buildings in the heart of the financial district of Edinburgh "proved the unique deal-making capabilities of the team".

MAS Real Estate plans to roll out deals in central and eastern Europe as the company capitalises on its relationship with Prime Kapital. MAS has a co-investment agreement with Prime Kapital, a Romanian-based company that has been highly rated because of its track record of finding good acquisitions in the central and eastern Europe region. "Our joint venture with Prime Kapital is key to our expansion strategy in CEE [central and eastern Europe]. The market is overheated there but Prime helps us to find acquisitions where we don’t overpay," said MAS CEO Morné Wilken.

The sharp sell-off of a number of blue chip property stocks since January, including the Resilient stable of companies and pure rand hedge counters such as MAS Real Estate, Sirius Real Estate, Intu Properties and Hammerson, has dragged the South African listed property sector down more than 16% year to date. Last year, property stocks delivered an impressive 17% average total return. Share price weakness has created buying opportunities for investors who are prepared to sit out current volatility. Metope CEO Liliane Barnard comments.

Investors are seeking more exposure to property funds that offer some level of specialisation, says Evan Robins of Old Mutual Investment Group. Property groups focused specifically on a single type of property or based in one geographical area tended to have management teams that could draw better returns from their real estate than those that were highly diversified, he said. Investment analyst Kelly Hook comments.      

Tax free savings accounts (TFSAs) were first introduced in South Africa in March 2015 to encourage household savings. Neither income earned nor capital gains are taxed in these savings accounts. The annual allowance for TFSAs was raised in the 2018 tax year from R30 000 to R33 000 per annum, with a capped lifetime limit in contributions of R500 000. The decision of where best to allocate the R33 000 annual allowance is not always an obvious one for investors. Liliane Barnard, CEO of Metope Investment Managers, comments.

South African investors enjoyed a much better year in 2017 than they have for a while. The strong performance of the JSE in the third and fourth quarters meant that by far the majority of local unit trusts delivered inflation-beating returns for the 12 months to December 31.What is particularly interesting about the list of last year’s top performers, however, is how varied it is. It is not dominated by funds from any particular category or strategy. According to figures from Morningstar, the top 20 includes smart beta products, index funds, resource funds, property funds and unit trusts with emerging market and African exposure.