November 11 2026 17:15
South African real estate investment trusts (Reits) returned 2.4% in October, beating both equities and bonds and stretching their lead for 2026, even as the market digested the Reserve Bank’s September rate hike.
The All Share Index slipped 0.4% in October while the All Bond Index returned 2.1%, according to the SA REIT Association’s Chart Book for October 2026. That leaves SA Reits up 6.5% for the year to date, ahead of bonds at 5.7% and well clear of equities, which are down 3.6%.
It is the fourth month out of the last five in which listed property has beaten the equity market.
“SA REITs had another good month,” says Ian Anderson, head of listed property and portfolio manager at Merchant West Investments, who compiles the Chart Book. “The sector has now beaten equities in four of the last five months and is leading both equities and bonds this year. It has done so while the Reserve Bank’s September increase was still being absorbed. A large part of the explanation is balance sheets.”
Independent analyst Garreth Elston of Golden Section Capital, who tracks the wider JSE property universe including offshore-focused counters, describes October as a rebound rather than a breakout. The J803 All Property Index returned 2.26% and the J253 SA Listed Property Index 1.98%, reversing a third-quarter loss after the J803 fell 4.10% in August and added only 0.49% in September.
Even so, the J803 has not regained its end-July level. Its year-to-date return of 5.38% compares with 6.93% at the end of July, and its rolling 12-month return has dropped to 13.77% from 26.11% three months ago. Global property did better: the GPR 250 REIT Index returned 4.54% in rand terms in October.
Accelerate and Texton lead a broad rally
The gains were widespread, with 18 of the 22 counters tracked in the Chart Book ending October higher. Accelerate Property Fund jumped 17.5% and Texton rose 14.1%. Stor-Age (+7.6%), Delta (+5.9%), Spear (+4.3%) and Redefine (+4.0%) followed, with Attacq (+3.7%) and Vukile (+3.6%) also posting solid gains. R11.9bn worth of SA Reit units changed hands during the month.
Across the wider J803 universe, corporate action drove the biggest moves. Putprop soared 46.61% after a R9.00-a-share offer to buy out minorities and delist, while Exemplar REITail gained 32.16% as its Leratong City development opened. Sirius rose 14.22% and Primary Health Properties 10.21% after announcing a hospital joint venture with GIC.
At the other end, Acsion fell 49.97% in thin trading, Schroder European REIT dropped 7.22% after another valuation markdown in its wind-down, MAS slipped 3.48% and Dipula 2.21% ahead of its annual results. By sector, healthcare led at 10.21%, followed by storage at 7.57% and office at 6.72%, with industrial the weakest at 2.12%.
Oasis Crescent heads the year-to-date table with a 36.4% return, followed by Octodec (+25.3%) and Heriot (+23.7%). Attacq (+17.2%), Spear (+16.8%) and Fairvest A (+14.6%) are close behind. Seventeen of the 22 counters are in positive territory for the year.
Over 12 months, 21 of the 22 have delivered positive returns, ranging from 2.2% to 61.9%. Heriot leads that table at 61.9%, ahead of Octodec (53.3%) and Oasis Crescent (46.9%). Over three years, 13 counters have returned more than 30% a year, led by Fairvest B (43.5%), Octodec (42.1%) and Hyprop (42.0%).
Bond yields ease, and the budget helps
Bond markets recovered in October after a volatile start, with long-dated yields falling across most developed markets. South African bonds shared in the rally and got a further lift from the Medium-Term Budget Policy Statement (MTBPS). The long bond yield tracked in the Chart Book fell from 8.92% to 8.72%.
The sector’s forward yield edged up from 7.03% to 7.13%, narrowing its discount to bonds from -188 basis points to -159 basis points.
That is well below the Chart Book’s long-run average of -15 basis points, but Anderson says the comparison is no longer fair. The average dates back to August 1998, when Reits owned almost only local property, and it is skewed by the pandemic in 2020.
“Today many of the large caps have significant offshore exposure, where bond yields are much lower, so a more negative spread should be expected,” he says. “Over the last ten years the spread has averaged -59 basis points and over the last five years -181 basis points. Against those benchmarks, the sector is not expensive relative to bonds and is slightly cheaper than its five-year average.”
The MTBPS, tabled on 21 October, gave the bond market real support. National Treasury said government debt peaked at 78.4% of GDP in 2025/26, and it expects a consolidated deficit of 3.9% of GDP for 2026/27. Tax revenue is running R17.1bn ahead of February’s estimate, helped by mining.
Most importantly for bonds, Treasury cut weekly fixed-rate bond issuance by R600m to R1.95bn and announced a bond buyback programme. The benchmark 10-year government bond yield fell 12 basis points on the day. Growth is forecast to improve from 1.2% this year to 1.6% in 2027.
“Lower bond yields underpin REIT valuations,” says Joanne Solomon, CEO of the SA REIT Association. “Fuel levy relief from November also puts money back in consumers’ pockets, which supports the retail tenants at the heart of so many of our members’ portfolios.”
Results point to a healthy sector
October brought three sets of interim results, an upsized equity raise and an offshore restructure.
Western Cape-focused Spear grew distributable income per share (DIPS) 8.02% to 47.29c, already beating its original full-year guidance of 6% to 8%, and lifted that guidance to 9% to 11%. It declared a dividend of 44.92c at a 95% payout ratio. Spear took transfer of R1.4bn of acquisitions at a blended 8.99% yield, mainly funded with equity: the Santam- and Sanlam-occupied office precinct in Tygervalley and Watergate Centre in Mitchells Plain. Industrial rental reversions were 13.49%, occupancy was 96.6% and its loan-to-value (LTV) ratio is just 21.91%.
Logistics specialist Equites grew its interim dividend 5.1% to 72.57c and reaffirmed guidance. The £200.5m sale of its Aviva portfolio largely completes its exit from the UK and cut its LTV from 35.1% to 28.1%. It parked most of the proceeds in UK-listed logistics Reits, one of which has since received a takeover bid. In South Africa, like-for-like rental growth was 5.3%. Seven projects worth R2.4bn on completion are under construction at yields of 8% to 9%, and Equites raised R650m in the debt capital market at its tightest spreads yet.
Oasis Crescent, the year’s top performer in the Chart Book, carries no debt and trades slightly above its net asset value. Its interim distribution fell 6.7% to 58.5c because Sacks Circle, its second-largest income-producing property, earned nothing while being turned into a logistics facility due for completion in December. Management says distributable income would have grown 9% without that effect.
Redefine restructured Horse Group, its Polish retail joint venture, letting its partner exit before March 2027 for €150.8m with a new preferred investor coming in. The deal simplifies Redefine’s Polish structures and gives it a more predictable, cash-backed return on its €50m interest.
Collins Property Group raised its interim dividend 5.8% to 55c, but its balance sheet is the sector’s most stretched among October’s reporters. Its loan-to-value ratio is 49.2% and interest cover just 1.65 times, according to Golden Section. Collins is selling about R2.7bn of property to bring LTV down to 43%, exiting Namibia, Mozambique and all but one office building.
Investors keep writing cheques
Fairvest upsized an accelerated bookbuild from R500m to R1.25bn at 675c a share, a 2.7% discount to its 30-day volume-weighted average price, and the book was still oversubscribed. The money will settle recent acquisitions and fund retail deals under negotiation. It follows the R900m Fairvest raised earlier this year and raises by Spear, Fortress and Hyprop.
Elston points out that the 675c issue price was about 38% above Fairvest B’s March net asset value of 488c a share, so the raise adds to NAV before costs.
Income growth is strong too. Rolling 12-month distribution growth stands at 11.09%, the best reading since 2017 outside the distorted comparisons of 2021 and 2022, and more than six percentage points ahead of inflation at 4.4%.
“The sector now leads both equities and bonds for 2026, building on total returns of 35.8% in 2024 and 38.6% in 2025,” says Solomon. “Balance sheets are in excellent shape, with low gearing and disciplined hedging, while distribution growth remains comfortably ahead of inflation.”
The case for caution: the consumer and the cost of carry
Elston is more guarded. He argues that October’s rally risks hiding a tougher operating outlook, as higher fuel and funding costs work their way through household budgets, tenants’ accounts and, eventually, landlords’ income.
CPI rose to 4.5% in September, but fuel prices were 27.9% higher than a year earlier, with diesel up 46.0%. Petrol rose by a further R3.12 to R3.33 a litre on 7 October. For a household buying 100 litres of petrol a month, Elston calculates that October’s increase alone adds about R312 to R333 to the monthly bill.
The MTBPS fuel levy cut of R1.50 a litre on petrol from 4 November saves that household about R150, less than half of October’s increase, and the relief shrinks in December before ending on 5 January 2027. Elston sees it as a buffer for festive trading rather than a lasting boost to spending power, and warns investors against assuming an indefinite subsidy.
He also flags the Reserve Bank’s September hike to 7.25%, the 4 November municipal elections and the risk of a correction in AI-linked markets. Leases and interest-rate hedges delay the pain rather than remove it. Spear, for example, has low gearing and interest cover of 6.31 times, but the fixed share of its debt fell to 56.04% from 71.05% in February.
On valuation, Golden Section puts the sector’s market-cap-weighted dividend yield at 6.31% and its discount to net asset value at 10.23%, wider than 8.3% at the end of July. Average LTV is 35.1%, interest cover 3.6 times and 79.1% of debt is hedged, with aggregate guidance pointing to about 6.8% distribution growth.
Elston cautions that a NAV discount is not proof of value on its own: if rental growth slows or property yields rise, NAV can fall too. Golden Section places listed property at 11 o’clock on its property cycle clock, in overbought territory, with a cautious outlook.
Outlook
Anderson expects the sector’s financial strength and inflation-beating income growth to keep supporting valuations.
“October’s reporters ranged from no debt at all to loan-to-value ratios of 22% and 28%,” he says. “The sector is raising equity on tight terms and companies that hedged their debt have so far been insulated from rising rates. With most guidance pointing to mid-to-high single-digit growth for the 2027 financial year, current valuations are underpinned by inflation-beating distribution growth forecasts.”
Both analysts agree that balance sheets are in better shape than in past cycles. Where they differ is on what comes next. Anderson sees inflation-beating income growth underpinning valuations; Elston wants clearer evidence that tenants can carry higher fuel, municipal and funding costs before he backs the rally. The next test comes as Dipula reports on 11 November, followed by the festive trading season.
October 2026 at a glance
| Measure | October 2026 |
|---|---|
| SA Reits total return (Chart Book) | 2.4% |
| J803 All Property Index | 2.26% |
| J253 SA Listed Property Index | 1.98% |
| All Share Index | -0.4% |
| All Bond Index | 2.1% |
| SA Reits year to date (Chart Book) | 6.5% (bonds 5.7%, equities -3.6%) |
| J803 year to date | 5.38% |
| Rolling 12-month distribution growth | 11.09% |
| Forward yield vs long bond | 7.13% vs 8.72% (spread -159 bps) |
| Sector discount to NAV | 10.23% (8.3% at end-July) |
Sources: SA REIT Association Chart Book, October 2026; Golden Section Capital SA Listed Property Review, October 2026
alistair@propertyflash.co.za
