South Africa's Real Estate Investment Trusts (REITs) - Attacq and Emira Property Fund - bucked the trend with excellent performance in January and February, says the South African Real Investment Trust (SAREIT) Association.

The statement follows the publishing of its February Chart Book, which provides an in-depth analysis of the SAREIT sector.

The association says that Attacq’s announcement that the company had concluded a non-binding term sheet with the Government Employees Pension Fund, represented by the Public Investment Corporation (PIC), helped to buoy the sector.

Earlier this month, Attacq announced the proposed acquisition of 30% of the ordinary shares and shareholder loans in Attacq Waterfall Investment Company (AWIC) for R2.5 billion and the injection of a further R300m into AWIC as a shareholder loan.

The market responded positively to the announcement, and Attacq’s share price gained around 19% in February.

In the case of Emira, its share price rallied over 10% following a strong set of results for the six months that ended 31 December 2022. Both distributable earnings and distribution per share comfortably beat analyst expectations.

However, Accelerate Property Fund’s share price fell more than 25% after the company announced an R50 million renounceable rights issue at 70c per share to provide the company with the short-term liquidity needed to enable the repositioning of Fourways Mall.

Merchant West Investments portfolio manager Ian Anderson said persistent load-shedding between stages 3 and 6 is weighing heavily on investor sentiment towards South Africa.

“It is difficult to quantify the full impact of load-shedding across the sector since different property types and tenants have different power needs.

“However, most companies in the sector have already done significant work to protect their tenants from load-shedding. This represents a significant commitment to tenants in an effort to address the crisis,” he said.

Anderson says that REIT activity should increase in March and April as some REITs release their first-quarter results.

Despite these challenges, the ALPI and SAPY delivered respective total returns of -1.9% and 0.5%, which places the SA-listed property sector amongst the best-performing markets globally for the calendar year.

“We attribute SA property’s relative outperformance to its lower starting valuations in comparison and the milder adjustment to discount rates as domestic bonds rose by a smaller margin than global bonds," according to Sesfikile Capital.

SA listed property capped 2022 with an outstanding fourth quarter as the ALPI and SAPY gained 18.2% and 19.3%, respectively.

The chart book is a monthly publication and can be downloaded from the SAREIT Association’s website, www.sareit.co.za.