BI-ANNUAL DASHBOARD

Source: Bloomberg & Catalyst Fund Managers
Data is as at 30 June 2021

The SA listed property sector has rebounded strongly year-to-date, after the SAPY and ALPI delivered total returns of -34.5% and -35.5% respectively for the year ended 31 December 2020. The SA listed property has managed to outperform equites and bonds quarter-to-date 12.12% while the 12-month returns compare favourably relative to other asset classes, with total returns of 25.17% and 25.59% respectively for the SAPY and ALPI.

The best performing companies year-to-date in the All Property Index were Emira, Arrowhead B, Vukile and Hammerson.

• Emira (EMI) advised shareholders that Maitlantic 10 Pty Ltd and Clearance Cantara Master Fund Ltd acquired further shares in EMI, which has resulted in their shareholding increasing to above 35%, triggering a mandatory offer to remaining shareholders at an offer price of R9.15/share.
• Arrowhead has been the subject of potential corporate action with Fairvest (FVT) exploring an initiative to unlock value for shareholders of both Arrowhead Properties Limited (AHB) and Fairvest. Fairvest is currently engaging, on a select basis, with certain shareholders of Fairvest and Arrowhead with a view to acquiring AHB ordinary shares in exchange for newly issued FVT shares.
• Vukile reported results for the full year ended March 2021 with the board declaring a final dividend of 101cps representing a 79% payout ratio. The company reported better than expected operational performance and an improved capital structure in the reporting period.
• Hammerson managed to raise funds through a fully supported rights issue which helped elevate some of the balance sheet and solvency concerns, together with potential asset disposals. The company has further benefitted from the reopening trade and the lifting of lockdown restrictions in the UK.

Some of the worst performing companies in 2021 were Fortress B, Fortress A, Stor-age and Hyprop.

• Fortress withdrew its dividend guidance for the year ended 30 June 2021 following Nepi Rockcastle withdrawal of its earnings guidance for FY2021. This is due to more severe lockdown restrictions which is expected to have a significant impact on distributable earnings per share in H12021.
• To alleviate balance sheet concerns, Hyprop raised new equity through an accelerated bookbuild, while other listed companies used a dividend reinvestment plan to raise equity/retain the dividend. A dividend reinvestment plan can potentially have a dilutive impact on company earnings and net asset values on a per share basis, however with the sector still trading at a discount to NAV and an attractive forward yield, it is a more equitable way to raise equity/retain the dividend in our view. This is due to it only being open to existing shareholders, does not require fresh capital and should all shareholders partake, their equity interest in the company would remain unchanged.

Refer to Annexure for the full list of Individual Stock Performance for the year-to-date information as at 30 June 2021.

Source: Bloomberg & Catalyst Fund Managers
Data is as at 31 December 2020

Historically, the income return from property has been relatively stable with volatility in total returns emanating from the capital component. Due to lockdown restrictions, tenant relief, bad debt increases and general uncertainty the income return from property has come under pressure as available earnings have diminished and companies endeavour to retain cash through dividend deferrals and the implementation of pay-out ratios. Despite the diminished income return for the year at 4.1%, it remains above the latest inflation figure which was recorded at 3.2% for November 2020. In this regard real estate’s income component remains an effective inflation hedge.