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SA REIT Chartbook Podcast – June 2024


Ian Anderson provides a summary of the June 2024 SA REIT Chartbook in today’s podcast. Tap the play button on the image to listen to his latest podcast.

Ian Anderson

Ian Anderson

Head of Listed Property & Portfolio Manager

Listening /reading time: 3 Mins

The SAREIT sector surged 9.7% in June as the ANC, DA, IFP and NPA agreed to form a government of national unity, ending 30 years of ANC dominance in South African politics. The news was well received by market participants and long bond yields tumbled, reducing the risk premium on South African financial assets. Listed property was a major beneficiary of lower bond yields and the SAREIT sector comfortably outperformed the both the broader equity market (+4.1%) and the bond market (+5.2) in June. The sector is up 11.1% since the start of the year, again outperforming the equity and bond markets which have returned 5.8% and 5.6% respectively. While Accelerate was the top performer, rising 18%, Hyprop (+14.8%), Emira (+14.3%), Dipula (+12.0%), Redefine (+12.0%), Heriot (+11.1%) and Growthpoint (+10.8%) all delivered double-digit returns in June. The strong price gains helped push the market capitalisation of the sector back above R200 billion for the first time since February.

During the month, Accelerate successfully concluded a R200m rights issue that saw 73% of shareholders follow their rights, with the underwriter taking up just over 135 million rights offer shares. Delta announced that it was disposing of the Lexis Nexis building in Durban for R37.4 million, a 14% premium to book value. Fairvest released interim results at the start of the month, with A shareholders enjoying a 5% increase in dividends, while the B share dividend increased by 1.3% over the corresponding period a year ago. The company also guided that the dividend for the B share for the full year would be at the upper end of guidance of between 41.5c and 42.5c per share. The company remains one of the few REITs in South Africa that has maintained a dividend payout ratio of 100%. Growthpoint provided a nine-month update to the market in which management reaffirmed guidance of a 10% to 12% decline in distributable income per share in FY2024, mainly as a result of higher interest rates. Heriot REIT announced the acquisition of Thibault REIT, a related party, in an all-share transaction that values Thibault at approximately R1.1 billion.

Hyprop also provided an operational update to the market in which it highlighted continued improvement in key operating metrics across its portfolio, but didn’t provide guidance for FY2024. The company opted not to pay an interim dividend earlier in the year and the dividend for the 2024 financial year will only be considered by the board on the finalisation of the financial results for the full year. Resilient and SA Corporate were two other companies to provide updates to the market. Resilient guided for a full year dividend of between 410c and 420c per share, while SA Corporate forecast that their dividend would increase by between 5% and 7% in FY2024.

Safari released final results for the year ended 31 March 2024, reporting a small decline in dividends from 32c to 31c per share. The company also announced that it plans to change its year end from March to June. Spear announced the sale of 100 Fairway Close in Cape Town for R160 million, in line with the last book value. In a busy reporting month for South African REITs, Stor-Age also released results for the year ended 31 March 2024. The company declared a dividend in line with the dividend declared in 2023 and the company guided distributable income per share for FY2025 of between 121c and 126c, but also noted that the board was considering lowering the dividend payout ratio  to between 90% and 95% of distributable income. Historically the company has paid out 100% of distributable income. Vukile announced a sector-leading 10.5% increase in total dividends for FY2024 and is forecasting growth of between 4% and 6% in FY2025.

Given the steady improvement in property fundamentals, a more optimistic outlook for South Africa’s political backdrop and an expected reduction in official interest rates, it wasn’t surprising that South African REITs rallied hard in June, but despite the strong price gains, most REITs continue to trade at deep discounts to net asset value and still offer significant upside for investors when interest rates start falling.

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