Listed property’s slow recovery still outpaced by equity investments
The sector has gained in line with inflation but equity investments have outpaced it
The SA listed property sector has recovered very slowly so far in 2019 and is being outdone by equity investments.
According to research by Anchor Stockbrokers, the FTSE/JSE SA Listed Property Index (Sapy) had returned 4.7% in total, including capital and dividend growth up to last week Thursday. The All Property Index, which includes all real estate companies on the JSE, returned 3.5%. This was while the JSE Top 40 returned 13.3%.
But general equity analyst Keith McLachlan said on Thursday that, excluding some of the JSE’s largest counters — Naspers, Richemont, Anglo American and BHP Billiton — the Top 40 Index was up only 2.5% year to date.
Keillen Ndlovu, head of listed property funds at Stanlib, said Sapy had been held back by a weak economy and weak investor sentiment.
The R600bn Sapy, which includes the JSE’s top 20 liquid real-estate companies by market capitalisation, suffered its worst total return in more than 20 years in 2018.
The index lost 25.26% based on share-price declines and dividends in 2018. It was held back largely by the performance of four companies within the Resilient group stable, which all came under pressure in January 2018 following a R120bn selloff of their shares. The companies include Resilient, Fortress, Nepi Rockcastle and Lighthouse Capital.
The companies had accounted for 40% of the sector. Some asset managers and hedge funds released reports accusing the stable of market manipulation, insider trading and inflating profits.
The Financial Sector Conduct Authority (FSCA) has been investigating the four companies’ share trading and their directors, among other things.
Alex Pascoe, the leader of the directorate of the market abuse investigation team at the FSCA, said in March his team had finished the first part of its investigation, which was into possible insider trading of the four companies’ shares, and found no evidence of the practice.
The second part of its investigation, into false or misleading reporting by or about the four companies, is ongoing.
“We are going to release findings over time and are not rushing what is a highly sensitive investigation which affects many parties. There are many allegations here and we will continue to be thorough over the next few months,” Pascoe said.