Moneyweb - Listed property companies reach 52-week highs

Moneyweb - Listed property companies reach 52-week highs

New listings expected; Enormous demand for Atterbury shares

JOHANNESBURG – Quite a few listed property companies have reached 52-week highs today.
Fortress Income Fund (FFA), Hyprop Investments (HYP), Arrowhead Properties (AWA), Acucap Properties (ACP), Redefine Properties (RDF), Growthpoint Properties (GRT) and capital Property Fund (CPL) all reached 52-week highs, according to Moneyweb data.

Moneyweb previously reported how the listed property sector has surprised analysts during the first few months of this year and outperformed the local equity and bond markets and why the sector continued its strong performance.

The sector is expected to see a number of new listings during the year since the new South African Real Estate Investment Trust (REIT) will offer significant tax benefits. One such company, The Atterbury Group, recently announced that it plans to list its property fund on the Johannesburg stock exchange (JSE (JSE:JSE)) during the latter part of this year.

Demand for Atterbury shares

The demand for over-the-counter shares in The Atterbury Group’s property fund – Atterbury Investment Holdings Limited – has increased significantly since it decided to list the fund on the JSE in the latter part of this year.

Louis van der Watt, The Atterbury Group’s chief executive officer, says over the past six years, around R3bn worth of over-the-counter shares have been traded. Since the beginning of the year this number was between R100 million and R200 million.

Van der Watt says the board took a decision to list the company around four months ago.

This step could potentially create more liquidity for the group’s shareholders and would allow it to raise money for its development pipeline, which includes the R3bn Mall of Africa in Waterfall.
Van der Watt says the company will potentially raise around R750 million which will give investors the opportunity to invest in this tightly held Fund. The group indicated earlier, that the market cap of the fund could be around R6bn during its initial listing, depending on the gearing. Its gross assets are valued at around R12bn.

The performance of the fund

According to MornĂ© Wilken, chief executive officer of Atterbury Investment Holdings, the net asset value per share experienced compound growth of just over 20% over the last eight years. It reached R10.75 at the end of last year.

While the listed property sector performed slightly better during the same period, the sector was also subject to more volatility, Wilken says. The listed sector is currently also trading at an extremely high premium to net asset value, he notes. Wilken says because there is such a substantial demand for listed property shares, investors are willing to pay significant premiums.

Should you invest now?

Van der Watt says investors could benefit if they can currently get their hands on shares, but he believes they might struggle to buy in the absence of large sellers. The procedure for buying over-the-counter shares are available on the company’s website.

Van der Watt says although there is a large number of private investors who are currently interested in buying shares, there are only around 400 shareholders. Very few of them are currently looking to sell their shares, he says.

An analyst comments

Anton de Goede, property analyst at Coronation Fund Managers (JSE:CML), echoes Van der Watt’s sentiments. He says in the run-up to the listing, sellers will probably hold on to their shares and only sell it after the listing.

De Goede says growth of more than 20% in the net asset value of the company “is very good”. Although the listed property sector performed slightly better since 2005, achieving a total return of 21% per annum, one should keep in mind than the listed property sector uses income yield to determine performance – not net asset value, he notes.

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Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!