Once again the Marriott Property Equity Fund has reached capacity and in order to preserve current investors distributions Marriott has decided to close the fund. This will be effective from the 16 November 01 and the fund will only re-open on the back of potential new property listings.

The fund is currently 85% invested in listed property stocks and will remain invested at this level for the next 12 months. The fund has recently taken advantage of the expanding listed property market by investing in Arnold, Growthpoint and Sycom Property Fund's.

The Marriott Property Equity Fund is re-opening for new investments on the 5 October 2001 for both lump sum and debit order investments. There have been new listings in the South African property market and therefore the fund can re-open for a further R100m tranche.

For most investors, Marriott Property Equity Fund (MPEF)'s 69% three-year return after costs is merely a reflection of what could have been.
In September 1998, at the start of the property bull market, MPEF had total assets of only R20m. Even by March 1999, when the bull market was well entrenched, these had grown to only R141m.
There was a belated rush into what was eventually recognised as having been a top-performing sector. Two other manco's have launched property equity funds and a dearth of investment opportunities has forced MPEF, with assets now at R0.5bn, to close the door temporarily to new investments.
Earnings prospects over the next two to three years indicate growth below historic norms. Rental levels are under pressure and a number of property funds have warned of no or lower growth, particularly in 2002, as leases fall due for renewal. Interest rates have, at best, seen their best declines and currency and inflation pressures are producing ominous signs of potential rate hikes down the line.
It has been a great run for property investors but one that, for now at least, must be treated with caution.