The Silent Return Of Listed Property

The downtrodden sector on the stock exchange may now be valued at a discount. Finweek looks at which Reits bode the best chance for returns in 2021.

-  Glenda Williams

A challenging macroeconomic environment coupled with a pandemic have weighed heavily on property fundamentals.Once the best-performing asset class on the JSE, listed property has undergone a significant rerating in recent years, last year posting a negative return of 35%. The impact of Covid-19 has forced property companies to preserve capital, reset the earnings base through rental reversions and cost interventions and focus on key balance sheet repair, according to Stanlib.

Now, the sector is on the rise returning 6% to 8% to end March so far this year, says Keillen Ndlovu, head of listed property funds at Stanlib. Analyst sentiment too hints at the period of underperformance and negative returns coming to an end with upside potential in the stocks.

“The sector is beginning to attract some capital inflows post the sell-off in 2020 with the impact of Covid-19 in the base and as visibility improves and operational uncertainty reduces. Investors were attracted to companies with balance sheets that had low gearing and strong liquidity positions. While this remains in focus, we think investors are placing more emphasis on yield and the ability for companies to provide a return to shareholders,” Ridwaan Loonat, property analyst at Nedbank CIB, tells finweek.