NAV on 2019/09/13
|NAV on 2019/09/12
|52 week high on 2019/08/20
|52 week low on 2019/01/07
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
STANLIB Collective Investments (RF) Limited
FTSE EPRA/NAREIT Developed Rental Index Net Total Return
Keillen began his property fund management career at Standard Bank Properties in 2004 managing its leveraged listed property product. He became a listed property analyst at Stanlib in 2005 and now also co-manages the Stanlib Aggressive Income Fund.
Nesi started his investments career with RMB in 2002 where he was a member of the consumer industrial team and also assumed non-consumer research responsibilities. Nesi was previous head of Financials at RMB Asset Managers, responsible for banks and life assurance. He also managed the award winning RMB Financials Fund. In 2010, He was appointed as a fund manager and Head of property for Momentum. He managed the flagship Momentum Property Fund for over a decade and was responsible for asset allocation, research, strategy, and fund management within the property investments business. Nesi is a regular commentator on property, equities and the broader financial market. Nesi Joined STANLIB in June 2019 to co manage local and global listed property.
STANLIB Global Property Feeder Fund - Jun 19
Following a strong first quarter performance of 13.2% in 2019, the fund delivered a negative 3.1% total return in rands for second quarter. This compared with a rand benchmark return of negative 2.1%. Local currency strength (Rand up 2.9% vs USD) was the main driver of this negative performance, as the benchmark delivered a 0.7% positive return.
Our overweight positions in defensive German residential specialists, especially Deutsche Wohnen, detracted from performance as speculation regarding a rent freeze in the city of Berlin hurt this sector. This offset continued strong performances from our overweight positions in industrial and logistics REITs as well as self storage and office REITs in East Asia. From a country perspective, our overweight position in Germany and France detracted from performance, while an overweight position in the US and underweight positions in the UK and Hong Kong contributed positively.
Globally, REIT markets had a tougher second quarter following the strong rally in the first quarter of the year as prime property yields continue to compress albeit increasingly modestly as pricing has in many cases exceeded previous peak levels reached in 2007. This is especially true in East Asia’s most developed cities. US & Canadian property markets continue to benefit from relatively buoyant economic conditions driving up demand across all property subsectors except retail, whilst supply remains at or below historic average levels. As a result, REITs in this region continued to report steady growth in earnings in line with expectations with cautious optimism about the rest of the year and expectations of a recession pushed out to 2021. Balance sheets healthy and liquidity remains high with over USD300 billion of private equity capital available for investment. In contrast to Q1’s broad rally, performance this quarter was more mixed with defensive sectors such as industrial, self storage and residential outperforming retail and office sectors.
European property markets delivered a mixed performance for the quarter with Germany’s residential markets being challenged by politicians and the UK continuing to suffer from Brexit uncertainty. The structural demand for industrial assets continues unabated across all regions thanks to the relentless rise in online shopping. The negative impact of this trend is mostly affecting UK high street retail & Western European shopping centres, with vacancies and incentives to retain tenants on the rise. Paris and Madrid office markets are supported by positive demand/supply imbalances and niche property markets such as health care. Student housing is also showing growing rental values thanks to structural growth drivers, driving strong performance across Scandinavia, Benelux, Ireland and even in the UK. In Asia, Hong Kong was the worst performing market following the protests against the Chinese extradition bill and wider concerns over the city’s autonomy in the medium term. This is in stark contrast to Singapore where property markets are thriving, fuelled by strong occupier demand and weak growth in supply. In Japan, momentum continues in the country’s main city office, retail and industrial markets with vacancy levels at record lows and rental growth expectations throughout. Australia’s consumer spending rate is tapering, negatively impacting the retail and residential markets, while the main cities’ industrial markets are growing in line with the global trend of online retail. Most city office markets continue to recover from lows in 2018 with rents rising modestly in 2019. This trend is expected to continue into the next two quarters.
We expect concerns regarding trade wars, geopolitical tensions and UK political uncertainty to abate in the third quarter following growing expectations of increased monetary support from the G7 central banks with economic risks taking centre stage. This is a supportive environment for property and REITs as long term leases cushion investors from the early effects associated with any economic weakness. In addition, valuation yields and earnings are supported by a growing risk premium and lower re-financing costs from lower interest rates.
We reduced our exposure to German residential companies during the second quarter of 2019, in favour of continental industrial specialists. Our fund’s exposure reflects our view that defensive property exposure, with a clear focus on risk mitigation, is the correct strategy in the current environment. We encourage investors to take a threeto five-year view. At the end of the quarter, Global listed property was trading at a discount of about 5% to current net asset value and offered a one-year forward average dividend yield of just under 4%, assuming just over 5% earnings growth.
The commentary gives the views of the portfolio manager at the time of writing. Any forecasts or commentary included in this document are not guaranteed to occur.
The investment objective of the STANLIB Global Property Feeder Fund is to maximise long term
total return, both capital and income growth. Apart from assets in liquid form, it will consist solely of
participatory interests in a single portfolio of a collective investment scheme operated in territories
with a regulatory environment which is to the satisfaction of the manager and trustee of a sufficient
standard to provide investor protection at least equivalent to that in South Africa, namely the
STANLIB Global Property Fund.