Property Flash


Resilient Reit may have threatened to de-list but analysts don’t expect to see many real estate investment trusts (Reits) leaving the JSE any time soon.

Reslient says it is battling to justify its listing costs against its ability to attract capital from investors. The company would be able to operate differently and with different levels of corporate governance as a private company than if it were listed.

Not only property companies are considering de-listing. Massmart, a retailer will also de-list after Walmart buys out the group. In fact over the past seven years, an average of 25 companies have de-listed each year.

But most income producing property companies became Reits because they wanted to have access to tax benefits and needed to stay listed. As a Reit, at least 75% of distributable income is paid out to investors. The funds are then taxed in the hands of the investors and not the company.

Reits were all the rage and managed to draw in investors seeking growing dividends.

They raised billions from South African and international investors between late 2013 and 2018 when the sector suffered through the Resilient scandal. There was a large sell-off in property stocks after critics claimed Resilient and its partners were inflating profits artificially. Then the pandemic didn’t help things in 2020 and 2021.

Now times are leaner as development activity has slowed down. SA’s economy can’t get a break and, globally, markets are uncertain.

Reits have changed what they invest in and where but they aren’t set to give up their listings.

Evan Robins, an investment manager at Old Mutual Investment Group says while some Reits may not pay a dividend in a year because they failed the solvency and or liquidity tests involved, this doesn’t mean these companies will entertain the idea of a de-lisitng.

It’s more likely that Reits will wait for the listed sector to recover, he says.

We are also seeing property funds list on other exchanges such as the Cape Town Stock Exchange.

Pan-African fund Grit Real Estate de-listed from the JSE and chose to focus on being listed on the London Stock Exchange.

Perhaps it’s not surprising that SA managed Reits which have spent around 15 years buying assets abroad, are also considering listing abroad.

It’s also possible we could see consolidation instead of de-listings. A number of funds are sitting with market capitalisations around R2bn and R3bn, making them ripe for the picking.

One fund which will probably de-list is Rebosis Property Fund, should its business rescue process succeed or not.

Here’s hoping that by 2024, we start to see a slew of new listings by the likes of Inospace and Improvon.

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