Investors rotate into offshore property stocks as relentless load-shedding and a stuttering economy dim SA’s growth outlook.
JSE property stocks that generate 100% of their earnings offshore are back on the sector’s leader board, reversing some of the hefty losses recorded last year.
The winners include UK-focused Industrials Reit, Hammerson and Shaftesbury Capital; German and UK business park owner Sirius Real Estate; and East European plays Nepi Rockcastle and MAS Real Estate . Higher interest rates have also resulted in alternative income-yielding assets becoming relatively more attractive.
Anchor is slightly more bullish about global Reits, with a forecast total return of 6% vs 4% and 8% for bonds and general equities. In terms of offshore stock picks, Tilly says that at current share price levels Sesfikile likes MAS, Nepi Rockcastle and Shaftesbury. He believes MAS and Nepi Rockcastle will both benefit from strong organic growth still coming out of Central and Eastern Europe.
He notes that the return of tourists from Asia and the Middle East to London has driven a strong recovery in spending in Shaftesbury’s West End portfolio, which includes iconic work, live, shop and play precincts such as Covent Garden, Carnaby Street and Chinatown. The company provides conventional office, warehouse and manufacturing space on long-term leases to larger blue chips, as well as smaller, flexible work and storage spaces let for shorter periods to SMEs and one-man bands.
Sirius’s operating platform offers to the property letting market what booking.com and Airbnb offer to the travel industryHubbard says Sirius should in fact be trading at a 20% premium to NAV. Apart from higher rates hitting Europe-focused real estate companies especially hard, he ascribes Sirius’s large discount to the company’s operating platform not being included in NAV calculations.
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