Metope In The News

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.

The real estate sector may have only 4% of the assets of the collective investment schemes industry, but it is still a substantial R81.4bn. Part of the success of the property sector over the past 15 years can be explained by the increased demand for retailer investors. They made the right call by favouring property over bonds. Even though bonds represent a larger, more liquid pool of funds, there is just R61.7bn in bond funds (now called variable term funds).  All the large fund houses run property funds, with the exception of Foord and Allan Gray. These businesses have taken a conscious decision to keep their ranges tight.

There’s a measure of negativity around listed retail space. But JSE-listed Vukile Property Fund’s performance illustrates that even in a weak macroeconomic environment impressive operating metrics can be achieved with a stable, defensive retail portfolio.

A number of SA-focused property stocks have fallen sharply in recent weeks while investor appetite for the JSE’s rand hedge offerings appears to be stronger than ever. Despite concerns that offshore counters are starting to look expensive, the likes of Greenbay Properties, Sirius Real Estate, MAS Real Estate and Nepi Rockcastle continue to test new highs. The trend has no doubt been supported by the recent spate of less-than-impressive results reported by SA real estate investment trusts (Reits).

Stor-Age Property Reit, the only specialised owner of personal storage assets on the JSE, has tripled its market capitalisation to about R3.5bn over the past two years. Stor-Age grew its dividend per share 9.25% to 47.02c in the six months to September, financial results showed, one of the strongest performances from listed property funds invested primarily in SA. The group is expecting to achieve double-digit dividend growth of between 11% and 12% for its March 2018 financial year, having expanded into the UK personal storage market, said CEO Gavin Lucas.