Metope In The News

Attacq plans to convert into a real estate investment trust (Reit) after operating for three-and-a-half years as a capital growth company and not declaring dividends to shareholders. Attacq, which is responsible for the Waterfall City development located between Midrand and Pretoria, annouced that it would convert into a Reit by July 2018. The conversion paves the way for the company to start distributing regular dividends to shareholders. Reits are compelled to distribute more than 65% of their rental income as dividends to shareholders.

South African investors are still chasing yield, judging by the hefty R11bn in fresh capital raised by the listed property sector year to date through rights offers and private placements. Most of the money invested in the sector has gone to offshore property counters.  

Delta Property Fund, which focuses on renting offices to the state, plans to grow significantly in 2017 as it looks to broaden its investor base. The largely black-owned company is planning to raise as much as R5bn worth of capital through a shares issue to a new empowerment consortium, nearly doubling its market capitalisation, which sits at R6bn.

The listed property sector has had a tumultuous year, making it increasingly difficult to forecast returns as the share prices of many counters continue to see-saw. However, one counter that is proving surprisingly resilient is Equites Property Fund, the JSE’s only specialist industrial play.

Industrial real-estate focused Equites Property Fund has outperformed expectations since listing about two-and-a-half years ago, growing its portfolio from 17 properties worth R1bn to 52 valued at R6.2bn at the end of February. Andrea Taverna-Turisan, the group’s CEO, said its industrial focus and expertise had stood it in good stead.

It has been a slow start for Poland-focused property company Echo Polska Properties (EPP) in articulating its corporate strategy to income-chasing investors since its JSE listing seven months ago. Underscoring this is its share price performance, which has fallen (along with other offshore counters in SA’s real estate sector) by 21% since September last year. But the company, with a market capitalisation of R10.7 billion, plans to reposition its property investments towards Poland’s retail market to turn its fortunes around.

When Poland-focused property company Echo Polska Properties (EPP) listed on the JSE in September last year, investors probably overlooked it for larger counters already on the local bourse. EPP’s JSE-debut came weeks after the listing of offshore counters Hammerson Properties and Globe Trade Centre – at a time when concerns grew in the asset management industry about the limited investor pool of capital to support the flurry of new listings. Among others, these factors have seen EPP’s share price shed 21% since listing.  

The timing of Echo Polska Properties’ (EPP) listing in mid-September last year was unfortunate. The JSE debut of the purely Polish property play followed a strong rebound in the rand and came after Britain’s decision to exit the EU. It also coincided with a new-listings fatigue that seems to have set in among fund managers due to the sheer number of new JSE real estate counters vying for investors’ capital in 2015/2016. However, analysts believe the company’s investment case remains compelling.

Fortress Income Fund continues to be one of the darlings of the listed property sector and is expected to once more deliver double-digit, sector-beating returns for owners of its B shares. The top 40 stock has soared after its takeover of Capital Property Fund about a year-and-a-half ago and was now well positioned to handle local and offshore shocks, fund managers said.

Investors may no longer be queuing up to take a bet on the African growth story. But not everyone has cut their losses and turned their backs on the continent. Bronwyn Corbett, who heads Mara Delta, the JSE’s first pure pan-African focused property counter, remains bullish on Africa’s growth prospects.