Why listed property appeals

Liliane Barnard, founder of the Metope group.

Boutique investment management firm, Metope Investment Managers, launches its listed property unit trust offering to the investing public on 2 February 2015. Metope is a privately owned independent firm with assets under management of more than R2.4-billion. It has successfully managed segregated institutional listed property mandates for more than seven years and has now teamed up with MET Collective Investments to offer the investing public the same investment management capability.

Currently, listed property is on all investors’ radar screens – but this wasn’t always the case. So says Liliane Barnard, founder of the Metope group, who has 25 years’ investing experience and is Metope’s chief executive officer and senior listed property portfolio manager. Liliane has seen it all in the listed property sector – from the late 1990s as head of listed property at Old Mutual Asset Management, when listed property was a neglected asset class, to today, as listed property has grown into an important asset class in its own right.

The listed property sector has grown from a market capitalisation of about R14-billion in 2002, when the Property Unit Trust and Property Loan Stock JSE Indices were created, to more than R510-billion in 2014 – with plenty of growth still to come. The listed property sector now makes up roughly 4% of the FTSE/JSE All-Share Index, with three property shares now included in the FTSE/JSE Top 40 Index.

Source: I-Net Bridge

The sector continues to grow more attractive, with new listings, equity raises and dividend reinvestment plans well supported by local institutions. Seven new property portfolios were listed on the JSE during 2014, in the real estate investment trust (REIT) structure as well as property development companies. Despite this, only about 35% of investment grade property is available to shareholders in the listed space. Portfolios are expected to increase in size as new properties are brought into the market, from new developments and existing stock.

The growth in size and increased liquidity of the sector, together with the adoption of REIT principles and practices, has enticed foreign capital investment into the South African market. South African commercial property shares have a unique characteristic: high and growing dividend yields that drive long-term capital growth. With more than 95% of property income derived from rentals, distributions are backed by strong cash earnings, which grow annually with escalations.

South African listed property has significantly outperformed all other asset classes over three, five and 10 years, with an average return per year of 21.5% for the past 10 years.

Exposure to the right shares will give investors access to prime real estate in the country, as well as the skills and expertise of highly competent management teams. With Liliane Barnard at the helm of Metope, a wealth of investment experience is available to the unit trust client. Backed by a solid research capability, Metope offers an investment portfolio aimed at generating sustainable income distributions and long-term capital growth.

Kevin Hinton, head of distribution at MET Collective Investments, says: “The partnership with Metope provides the opportunity for investors to access a quality investment firm via the vehicle of a well-regulated unit trust. In an exceedingly competitive investment management landscape in South Africa, dominated by the large investment firms, we have no doubt that Metope is well positioned to provide investors with market-leading real estate investment returns over the longer term and will attract those investors wanting to diversify their investments to smaller niche-based boutique firms.”

The Metope MET Property Fund is available on the MET Collective Investments platform at www.metci.co.za or www.metopegroup.com.