SA listed property sector declined by just over 5%

Interest rate sensitive securities like listed property were also sold off aggressively by investors who were worried that bond yields would rise further. 

The week that ended on 21 June 2013 was another tough week for investors in South Africa’s listed property sector.

The US Federal Reserve confirmed their willingness to 'taper' bond purchases this year and possibly end their bond-buying programme during the course of next year. This caused bond yields around the world to rise sharply.

Interest rate sensitive securities like listed property were also sold off aggressively by investors who were worried that bond yields would rise further. During the week ended 21 June, South Africa's listed property sector declined by just over 5% as South African bond yields rose 50 basis points and the Rand weakened to R10.15/US$. The sector has now given back all of the first quarter's impressive gains and is flat year-to-date.

During the week, Fountainhead Property Trust announced the appointment of Len van Niekerk as chief executive officer. Van Niekerk was previously the managing director of SA Corporate Real Estate Fund and has extensive experience in the listed property sector, gained at Standard Bank and Old Mutual.

Resilient Property Income Fund announced that its application for Real Estate Investment Trust (REIT) status has been approved by the JSE Limited, effective 1 July 2013.

New Europe Property Investments (NEPI) finalised the details of a rights offer to raise approximately €100 million. In terms of the offer, NEPI shareholders will be offered a total of 20,833,328 new NEPI shares in the ratio of 13.07987 new NEPI shares for every 100 NEPI shares for shareholders on either the South African or UK share registers. The subscription price per rights offer share is R64.80 for shareholders on the South African share register and €4.80 for shareholders on the UK and Romanian share registers.

As a result of last week's price declines, the one year forward yield on the listed property sector has risen to 7.3%, while prospects for medium-term growth in distributions remain unchanged at 7% to 8% per annum. This should result in inflation-beating returns for investors over longer investment horizons although, in the short-term, price volatility is likely to remain high as global bond yields continue to rise."

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