Metope In The News

Delta Property Fund, which owns a big portfolio of government-tenanted buildings, has been hit by delays in the implementation of the new Department of Public Works leasing policy. The company declared a disappointing set of results on for the six months to August, with dividend payouts up only 1% year on year.  The department’s new policy framework was expected to be finalised in April, but in President Jacob Zuma’s cabinet reshuffle in March, former public works minister Thulas Nxesi was replaced with Nathi Nhleko, delaying the process.

THE world’s financial markets, including the JSE, showed a welcome uptick in the third quarter of this year. In August, the FTSE/JSE All Share Index, after remaining virtually flat for two years (but with considerable volatility), broke free of its record of just above 55 000 points set in April 2015, and it has climbed significantly since then. So what have the collective investment scheme companies made of the improved environment?  

SA Corporate Real Estate, the diversified owner of industrial, retail, commercial and residential buildings located primarily in the big metropolitan areas of SA, with a secondary node in Zambia, grew its dividends 4.4% in the six months to June. The six-month performance was affected by nonrecurring income, resulting mainly from a recovery of written-off bad debt and increased vacancies in the company’s residential portfolio. Historically, SA Corporate has been weighted towards retail and industrial nodes, but it has invested in residential real estate in recent years.

The pendulum has swung decidedly in favour of investment into Central and Eastern Europe (CEE) in recent years. One company aggressively targeting that region’s growth prospects is JSE-listed MAS Real Estate Inc. MAS, also listed on the Luxembourg bourse, has a portfolio valued in excess of €500m made up of 53 properties spread across the UK, Germany, Switzerland and the CEE. But an immense pipeline around twice the current asset value looks to grow that mostly retail portfolio value to one that exceeds €1bn in the next three to five years.

Exposure to international markets through JSE-listed property funds has increased significantly for local investors.  Much of that exposure is to the prime and developed markets of Western Europe, which, according to Nedbank CIB, is around 42% of the rand value of the listed property sector’s physical assets. Western Europe is more often than not seen as the go-to region to create sustainable long-term returns for shareholders.

Listed property, a front-runner asset class on the JSE in recent years, has emerged as a laggard on the back of growing volatility in share prices. The SA Listed Property Index, which makes up the JSE’s 20 largest real estate stocks, has barely kept up with the total returns posted by ten-year government bonds, the JSE All Share index and cash over the past six and 12 months. The sell down in property stocks is not entirely surprising given the large swings in the rand exchange rate and bond yields, which have been impacted by the worrying state of the economy and increasing political uncertainty.

Watch Metope Investment Managers CEO Liliane Barnard’s presentation from the Moneyweb Boutique Asset Manager conference in July 2017

The SA listed real estate sector is increasingly becoming globalised as local property companies invest in direct property offshore and international property companies opt for dual listings on the Johannesburg Securities Exchange (JSE). For SA investors looking for exposure to property outside of the country, the JSE is a good place to start. Liliane Barnard, CEO of Metope Investment Managers, elaborates.

The SA listed real estate sector is increasingly becoming globalised as local property companies invest in direct property offshore and international property companies opt for dual listings on the Johannesburg Securities Exchange (JSE). For SA investors looking for exposure to property outside of the country, the JSE is a good place to start. Liliane Barnard, CEO of Metope Investment Managers, comments

The market is clearly impressed by Spear Reit’s growth story, judging by the significantly oversubscribed capital raise concluded by the company last week. Management, led by CEO Mike Flax, received bids for R528m, nearly double the R280m the company had hoped to raise. That’s no easy feat, given fund managers’ renewed preference for offshore property stocks. The trend is underscored by the fact that most of the R11bn (Stanlib figures) raised by the listed property sector in the year to date through rights offers and private placements has gone to offshore counters.