REITS
LISTED REITS
REITs now outweigh retailers
and hospitality on the JSE
BY LAURENCE RAPP
L
isted REITs (real estate investment trusts)
have become an increasingly important force
in the South African economy. Today REITs
listed on the JSE comprise 5.8% of the FTSE/JSE
All Share Index, making it a bigger sector than
retailers at 5.7% and healthcare 3.9%. This includes
South African and non-South African JSE-listed
REITs.
Over the past year the market capitalisation of SA
REITs has increased around 43%, to around R340
billion.
Laurence Rapp, SA REIT Association Chairman,
notes this sector growth has been achieved in some
of the most challenging economic times South
Africa has faced.
“It’s tough out there. We’re dealing with low
economic growth, an electricity crisis and job losses,”
says Rapp. “We also find ourselves in a ‘schizophrenic
economy’, with the threat of rising interest rates, yet
there is global liquidity and low base yields.”
Despite this the REIT sector has etched
out an impressive growth trajectory, with its
defensive investment qualities, solid track record of
performance and drive for international best practice.
According to Ian Anderson, Chief Investment
Officer of Grindrod Asset Management, the listed
REIT sector raised about R25 billion in net equity
over the past year.
Anderson notes the monthly value traded in
listed REITs averaged R10.3 billion over the last 12
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Commercial Handbook 2016
months. This is a 25% increase over the preceding
12-month period and 220% higher than five years
ago. “The average monthly trade was recently boosted
after several SA REITs were included in global
equity indices for the first time,” says Anderson.
In addition, investors have really started to
recognise listed property as a separate asset class. This
sector has significantly increased its base of investors,
both local and international, since introducing South
Africa’s REIT dispensation in 2013.
“Property is a long-term game,” says Rapp. “For
sustained success a focus on long-term value creation
is imperative for REITs. This is one reason the listed
property sector has continued to grow, especially over
the past dozen or so years.”
He adds with the sectors’ increased size and
economic impact, it is also bringing greater influence
to bear on all areas of business, from legislation and
tax to governance and social responsibility.
“Investment has become a global arena, so the
listed REIT sector and our members strive to be
on par with international best practice. We are
incredibly proud to count member companies of the
SA REIT Association among the country’s leaders
in important areas of our economy and society, not
to mention our industry’s extensive contribution to
South Africa’s social infrastructure,” says Rapp.
RESOURCES
The SA REIT Association
www.reimag.co.za