JSAPY | First quarter update: Taking a step back

The SA Listed Property Index delivered a total return of -19.6% during Q1'18 due to company- specific concerns. On a rolling 12-month basis, the sector's total return is -7.1% due to the negative Q1'18. Relative to other asset classes, the property index underperformed equities (ALSI: -6.0%), cash (+1.8%) and bonds (ALBI: +8.1%) during the first quarter. Due to the idiosyncratic nature of the SAPY's performance in the year-to-date, the typical correlation dynamics between property stocks, government bonds and the FX market has broken down.

In this report we provide an update on the reasons for the underperformance, an overview of domestic conditions and our expectation for the 12 months ahead. In the context of evolving macro and industry conditions, we update our DPS forecasts and valuations for Growthpoint, Hyprop, SA Corporate, Attacq, and Echo Polska after recent results and company developments. Resilient has also announced its intention to unbundle its stake in Fortress B. Therefore, we estimate the impact on expected distribution and balance sheet metrics across both Resilient and Fortress.