Listed property's (SAPY Index benchmark) total return in the second quarter was +0.9%. This was better than the All Share Index (-0.4%), and a beaten-down general retail sector (-11%) but behind the All Bond Index (+1.5%).

Over the past 12 months, the listed property index's total return has been +2.8% (All Share +1.7% and All Bond +7.9%). The fund outperformed the SAPY benchmark over this period before fees due to share selection. The fund will continue to hold meaningful positions in property shares we believe offer the most long-term value.

Operating conditions remain challenging for property companies and expectations are becoming more realistic. It is difficult to fill space in an environment with little economic growth and excess supply. Despite this, distribution growth remains decent. Funds continue to deploy capital offshore.

The SAPY has a 7.5% forward dividend yield (excluding Attacq) compared to 8.76% on the SA 10-year bond. Stripping out the non-South African inward listed component, the yield is closer to 8%. The sector has de-rated materially compared to bonds.

Near-term distribution growth should exceed inflation and the sector offers an attractive long-term return. Vacancies may increase. Conditions remain difficult with disappointing GDP growth; cost increases constraining net rental growth; and significant over-rentals on renewal in some pockets (a key concern, especially in offices also faced with significant potential new supply). Large malls remain robust but weaker, and there is too much retail space in some nodes; consumer health is a concern and tenants' profitability is under pressure. Bond yields are the key short-term driver of capital value volatility.

Listed property’s (SAPY Index benchmark) total return in the first quarter was a disappointing 1.4%. This was lower than the All Share Index (3.8%), the All Bond Index (+2.5%) and general retailers (+3.5%).

Over the past 12 months, the listed property index’s total return has been 1.5% (versus the All Share’s 2.5% and, significantly, the All Bond’s 11%). The fund outperformed the SAPY over this period due to its SA-specific share selection. The fund will continue to hold meaningful positions in the property shares we believe offer the most long-term value.

The first quarter’s results remained solid despite the difficult operating environment - but conditions are not getting any easier. There were few disappointments and only one local REIT reported dividend growth of less than 6%. Growth in net asset value (NAV) was anaemic and funds continued to internationalise. The SAPY has a 7.5% forward dividend yield (excluding Attacq) compared to the 10-year bond’s 9%.

Near-term distribution growth should exceed inflation. Vacancies may still increase in some sectors. A genuine recovery in conditions may take longer than many anticipate, with disappointing GDP growth; cost increases constraining net rental growth; and significant overrentals on renewal in some pockets (our key concern, especially in offices also faced with significant potential new supply). Large malls remain robust but weaker, with oversupply in some nodes and consumer health concerns. Bond yields are the key short-term driver of capital value volatility.

Listed property’s (SAPY Index benchmark) total return in the first quarter was a disappointing 1.4%. This was lower than the All Share Index (3.8%), the All Bond Index (+2.5%) and general retailers (+3.5%).

Over the past 12 months, the listed property index’s total return has been 1.5% (versus the All Share’s 2.5% and, significantly, the All Bond’s 11%). The fund outperformed the SAPY over this period due to its SA-specific share selection. The fund will continue to hold meaningful positions in the property shares we believe offer the most long-term value.

The first quarter’s results remained solid despite the difficult operating environment - but conditions are not getting any easier. There were few disappointments and only one local REIT reported dividend growth of less than 6%. Growth in net asset value (NAV) was anaemic and funds continued to internationalise. The SAPY has a 7.5% forward dividend yield (excluding Attacq) compared to the 10-year bond’s 9%.

Near-term distribution growth should exceed inflation. Vacancies may still increase in some sectors. A genuine recovery in conditions may take longer than many anticipate, with disappointing GDP growth; cost increases constraining net rental growth; and significant overrentals on renewal in some pockets (our key concern, especially in offices also faced with significant potential new supply). Large malls remain robust but weaker, with oversupply in some nodes and consumer health concerns. Bond yields are the key short-term driver of capital value volatility.