2018/12/12 00:00:00

The Citadel SA Property H4 Fund ('the fund') was down 0.8% during Q3-2018, ahead of the FTSE/JSE SA Listed Property Index ('SAPY') which fell 1%. The fund's relative performance was supported by underweight positions in Growthpoint and Greenbay, along with overweight positions in Grit, Delta and Fairvest. The largest detractors included underweight positions in NEPI Rockcastle and Equites, as well as overweight positions in Dipula, Safari and Spear REIT.
The third quarter of 2018 saw local markets struggle on the back of weak economic data; and news that South Africa had entered a technical recession. Ongoing political uncertainty, coupled with South Africa being in the general emerging market crossfire, dampened investor sentiment. The rise in unemployment has put additional pressure on the office sector, which currently has the highest vacancy levels at 11.1%. Retail companies also reported weak results during the quarter, as smaller retailers struggled to meet their lease obligations in the midst of a tough economic environment. The sizeable offshore exposure of the listed property sector cushioned some of the pain taken by the South African-facing companies; highlighting the importance of geographical diversification.
The fund continues to adhere to its policy.