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 The Sharenet Daily 
Tuesday, 24 March 2015 - 20:00
 
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Seed Weekly - Property ? Return Deconstruction

Many successful investors look to invest into assets that offer an attractive initial yield with a high probability of that yield growing consistently in real terms into perpetuity. By taking this approach, investors need not overly concern themselves with the prospects of capital growth, as the income generated (that should be consistently reinvested) will be a large component of the total return and, as with most investments, capital growth should approximate income growth over a full cycle. Furthermore, if investing when the yield is higher than the long term average, investors could receive additional capital returns through the rerating of the asset.

Investment returns can therefore be broken down into 3 broad sources:
• Initial yield
• Growth in yield
• Change in rating

When looking at the local listed property market, it is interesting to dissect the three sources of return to determine whether this asset class offers value or not. Property is an asset class that local asset managers have (even in their own words) historically been underweight, and it is interesting that there are currently divergent views about this asset class amongst some of the larger managers.

The starting yield offered by this asset class is currently 5.3%, which is at the low end when compared to its history. This is partially offset by ultra low interest and inflation rates which have resulted in most other asset classes also offering historically low yields. While the market trades at historically low rates, property portfolios can be constructed with an initial yield of between 6.7% - 7.7% (above cash and broadly in line with bonds).

While it’s all good and well to construct a portfolio with a high starting yield, it is short sighted if this is done at the expense of yield growth. The above mentioned portfolios have expected annual distribution growth over the next three years of between 8.5% and 10.5%, which in the current low inflation environment is healthy real growth. These expected numbers aren’t much different from the historical real growth in yield generated by property. The chart below shows real distribution growth of the index over the past 10 years. Over this period property distributions have grown, on average, 2% pa ahead of inflation (in line with the often quoted 8% annual rental escalation clauses many tenants face). Even from their peak (in mid 2007) distributions have grown in line with inflation.

Naturally there are risks that real distribution growth will temporarily go negative, which is where active management will play an important role. Over time, however, we remain convinced that the industry as a whole can grow distributions in line with inflation, with the better operators growing income in real terms. We also think that investors under appreciate (and hence undervalue) the consistency of this distribution growth (over this period annual equity distributions have twice contracted by more than 10% in nominal terms).

Over the very long term the impact of the change in rating doesn’t have too much of an effect on the total return generated from an investment (unless investing at valuation extremes). It does, however, add to the volatility of the return over the shorter period and is often a reason used by investors not to invest into property. This is the case as the initial yield has a high correlation with the bond yield, but what investors often fail to appreciate is the consistent growth in yield from property that is nonexistent in bonds. We also don’t define risk as volatility, but rather the permanent destruction of capital.

Seed’s Multi Asset Funds (Seed Flexible Fund and Seed Absolute Return Fund) and other managed solutions have performed extremely well over the past few years on a back of a sizeable allocation to property. While we aren’t married to this investment view, we expect that property will continue to deliver solid mid to upper single digit real returns for the foreseeable future (although it may exhibit a fair amount of volatility on the way).

Take care,

Mike Browne

www.seedinvestments.co.za
info@seedinvestments.co.za
021 914 4966

Tue, 24 Mar 2015
Top News
[IMAGE]
Revenue for the interim period jumped to R52.3 million (2013: R48.1 million). Profit for the period rose to R4.2 million (2013: R3.6 million), while headline earnings per linked unit grew to 0.75cplu (2013: 0.57cplu). Dividends No dividends were paid or declared during the financial peri  Full story

[IMAGE]
South Africa's rand rode the wave of an emerging market rally on Tuesday, extending gains to a new three-week high to a U.S. currency weighed down on expectations the Federal Reserve will delay an interest rate hike to September.  Full story
Taiwanese President Ma Ying-jeou flew to Singapore on Tuesday to pay his respects after the death of the city-state's first prime minister, Lee Kuan Yew, a diplomatically sensitive visit given China's stance that Taiwan is a renegade province.  Full story
Greece risks running out of cash by April 20 unless it secures fresh aid, a source familiar with the matter told Reuters on Tuesday, leaving little time to convince sceptical creditors it is committed to economic reform.  Full story
 
Markets
Gold steadied below a 2-1/2 week high on Tuesday, heading for its fifth session of gains on growing expectations that a U.S. interest. . .  Full story
Hong Kong shares finished lower on Tuesday, dragged down by Chinese firms after a survey showed China's manufacturing activity unexpectedly contracted to an 11-month. . .  Full story
China stocks clawed back sharp early losses to post their 10th straight daily gain on Tuesday as investors took advantage of a sharp. . .  Full story
Japan's Nikkei share average fell on Tuesday as a weak factory activity survey in China and a drop in U.S. markets weighed on. . .  Full story

Australian shares ended 0.2 percent higher on Tuesday led by gains in resources and energy-related stocks in line with firmer commodity prices.. . .  Full story
The dollar fell further on Monday on views a Federal Reserve interest rate hike will come later rather than sooner, and the decline. . .  Full story
Gold firmed for the fourth straight session on Monday to its highest in more than two weeks, as the dollar extended losses and. . .  Full story
Hong Kong stocks rose on Monday, taking cues from bullish mainland China shares, which extended their winning streak to a ninth straight session.. . .  Full story
SA Business
South Africa's Finance Minister Nhlanhla Nene said on Tuesday the temporary suspensions of key officials at the state-owned power utility Eskom was a concern, but the firm's financial stability was on course.. . .  Full story
The South African central bank's leading business cycle indicator rose 0.3 percent month-on-month in January, lifted by higher residential building plans passed and an increase in the dollar-based export commodity price index.. . .  Full story

Capitec Bank's new strategy of targeting wealthier clients in addition to its core low-income customers helped boost the South African lender's 2014 earnings by 27 percent, sending its shares to a record high on Tuesday.. . .  Full story
Company News
On 27 February 2015, the Directors proposed a final dividend for 2014 of 9.1 pence per share (the ˘Dividend÷). We are pleased to announce that the Dividend will be paid on 28 May 2015, subject to approval of the shareholders at. . .  Full story
In terms of the Listings Requirements of the JSE Ltd. relating to Trading Statements, a listed company is required to publish a trading statement as soon as it becomes aware that the financial results for the next period to be reported. . .  Full story
Company Results
Revenue for the year grew by 9% to R1.9 billion (R1.8 billion) and EBITDA was 17% higher at R340.8 million (R291.6. . .  Full story
Revenue increased to R1.8 billion (R1.7 billion) and gross profit was higher at R398.5 million (R334.5 million). EBITDA jumped to R79.8. . .  Full story
Loss for the period attributable to equity holders remained unchanged at R3.8 million (loss of R3.8 million). Furthermore, headline loss per. . .  Full story
Profit from operations increased to USD55.4 million (USD14.9 million). A net attributable profit of USD55.4 million (USD14.7 million) was recorded. Basic. . .  Full story
World Markets (Spot Prices)
NameTimeRPMove% Move
JSE Overall17:0052858.12298.770.57%
JSE Top 4017:0046735.06254.430.55%
JSE Gold17:001261.84-9.93-0.78%
JSE Financial17:0045477.05838.961.88%
JSE Industrial17:0074257.63171.000.23%
JSE Indust 2517:0065964.19131.410.20%
JSE Resource17:0043385.26-5.77-0.01%
DJ Futures19:5217960.00-56.00-0.31%
DJ Ind19:5818057.95-58.09-0.32%
SP 50019:582097.90-6.52-0.31%
Nasdaq19:585007.22-3.75-0.07%
FTSE 10018:217038.36.690.01%
DAX19:0812005.69109.850.92%
CAC4019:085088.2833.760.67%
Nikkei08:2819713.45-40.91-0.21%
Shanghai09:283691.413.680.10%
Hang-Seng10:4824399.60-94.91-0.39%
All Ords07:375934.5013.500.23%
NZSE 5006:485870.54-4.69-0.08%
NameTimeRPMove% Move
Gold $19:591193.544.370.37%
Gold R19:5914076.95-62.76-0.44%
Gold R/kg19:58452765-695-0.15%
Silver $19:5916.9560-.0250-0.15%
Platinum $19:591140.20-5.80-0.51%
Palladium $19:59762.00-13.00-1.68%
R18617:407.65-.05-0.65%
R20417:426.93-.12-1.63%
R20717:237.10-.02-0.28%
Brent Crude19:5855.33.010.02%
Rand / Dollar19:5911.7954-0.0933-0.78%
Rand / Pound19:5517.5030-0.2595-1.46%
Rand / Euro19:5512.8846-0.1389-1.07%
Rand / NZD19:599.0174-0.0874-0.96%
Rand / AUD19:559.2887-0.0851-0.91%
Yen / Dollar19:59119.6660-0.0320-0.03%
Euro / Dollar19:590.91550.00180.20%
Dollar / Euro19:591.0920-0.0025-0.23%
Pound / Dollar19:550.67270.00430.64%

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The JSE Today

Trading Statistics
DateAdv.Decl.Unch.ActivesVolumeValueTradesOrders
24/03/201518615559400246,757,819R16,058,528,231226857100604
23/03/201516220340405218,378,267R17,813,763,7732522351886090
20/03/201518817155414257,909,488R16,430,643,8632714292065401
19/03/201522213457413390,769,996R40,932,052,295262708552061
18/03/201514418467395212,238,740R16,270,048,2582381971498311
* Includes all listed instruments on the JSE
Major Moves Up
SharenameSaleMove% MoveVolume
1 WILDRNESS  55013030.95.%1
2 CONDUIT  2142412.63.%39711639
3 CAPITEC  4995033507.19.%357374
4 THARISA  600407.14.%1540
5 MASTDRILL  1338887.04.%26086
6 KEATON   214147.00.%13243
7 PALLINGHT  375246.84.%298091
8 GIJIMA  210126.06.%426
9 TREMATON  350206.06.%1260
10 RAUBEX  1860955.38.%158295
11 ARGENT  440204.76.%12890
12 TASTE  330144.43.%42553
13 OCEANA  100184184.35.%98699
14 DISCOV-N  31511314.34.%2923526
15 B-AFRICA  186557484.18.%969523
16 KAP  520204.00.%3603524
17 ELLIES   10444.00.%243080
18 PRESCIENT  10943.81.%20085
19 HULAMIN  856313.76.%46810
20 VODACOM  134614823.71.%1880863

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Major Moves Down
SharenameSaleMove% MoveVolume
1 Lodestone  631-64-9.21.%441707
2 HOMCHOICE  3650-340-8.52.%28694
3 ENX  220-18-7.56.%77100
4 TRADEH  1666-109-6.14.%33443
5 SOVFOOD  800-48-5.66.%10840
6 EQSTRA  398-22-5.24.%416858
7 ALTRON  1516-78-4.89.%2224
8 SAPPI  4813-245-4.84.%1647506
9 WESCOAL  180-9-4.76.%153751
10 KUMBAIO  16905-838-4.72.%584381
11 HUGE  242-12-4.72.%26000
12 ASCEN_A  568-27-4.54.%96419
13 GROUP-5  2360-103-4.18.%162871
14 ONELOGIX  481-17-3.41.%103675
15 MRHLD  1470-45-2.97.%1393861
16 LONMIN  2288-67-2.85.%340220
17 MPACT  4300-120-2.71.%268483
18 KIBO  110-3-2.65.%28940
19 QUANTUMF  342-9-2.56.%208973
20 BASREAD  234-6-2.50.%33769

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New Highs
SharenameSaleHighMove% MoveVolume
1 WILDRNESS  55055013030.95.%1
2 CONDUIT  2142142412.63.%39711639
3 CAPITEC  499505050033507.19.%357374
4 STANBANK  16991170395213.16.%4843790
5 PSG  15665156884152.72.%227805
6 NETCARE  440044381002.33.%4738522
7 RESILIENT  10650106502292.20.%828521
8 LIB-HOLD  15350155002601.72.%855155
9 SANLAM  804182171261.59.%4440682

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New Lows
SharenameSaleLowMove% MoveVolume
1 CARTRACK  850850-20-2.30.%64400
2 AQUARIUS  162161-2-1.22.%390912

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Index Summary
Index NameRPMove% Move
Top 4046,735.06254.430.55%
Industrial74,257.63171.000.23%
Mid Cap74,368.51599.900.81%
Small Cap58,986.9950.800.09%
Resource 2043,385.26-5.77-0.01%
Industrial 2565,964.19131.410.20%
Financial 1517,408.63351.032.06%
Financial & Ind. 3071,261.69421.700.60%
All Share52,858.12298.770.57%
Oil & Gas 28,782.75-423.27-1.45%
Mining 26,201.49-13.33-0.05%
Gold Mining1,261.84-9.93-0.78%
Platinum Mining31.09-.26-0.83%
GENERAL MINING7,672.5812.230.16%
Oil & Gas Producers 15,475.95-227.59-1.45%
Basic Materials 24,022.15-37.19-0.15%
Chemicals 21,685.10-27.56-0.13%
Forestry & Paper 40,203.35-303.59-0.75%
Industrial Metals 10,515.06-265.46-2.46%
Industrials 46,781.04397.920.86%
General Industrials 165.701.590.97%
Consumer Goods 65,232.84-221.32-0.34%
Automobiles & Parts 7,755.77-11.32-0.15%
Household Goods478.6871.45%
Health Care 10,846.04110.141.03%
Beverages 221.08-2.15-0.96%
Index NameRPMove% Move
Food Producers 8,954.5782.220.93%
Personal Goods 1,016.84-1.60-0.16%
Consumer Services 16,147.12192.301.21%
General Retailers 81,952.04384.870.47%
Travel & Leisure 6,246.9531.230.50%
Media 395.805.721.47%
Support Services 2,945.73-56.96-1.90%
Telecommunications 10,445.87-64.40-0.61%
Financials 45,477.05838.961.88%
Banks 81,725.862525.893.19%
Non-life Insurance 57,297.361148.502.05%
Life Insurance 44,052.62748.811.73%
General Financial 4,114.4523.880.58%
Technology 60,964.791553.802.62%
SHARIAH TOP40 3,607.9560.16%
FTSE/JSE SHARIAH ALL3,873.2290.24%
COAL MINING13,640.46-322-2.31%
FTSE JSE Fledgling 6,766.24260.38%
FTSE/JSE Alt X 1,254.70-12-0.98%
SA LISTED PROPERTY 659.811.53%
CAPPED PROPERTY 568.531.23%
RESOURCE 23,780.56-12-0.05%
DIVIDEND PLUS239.6310.55%
FTSE/JSE RAFI 409,926.51350.35%
Capped Top 4024,945.231390.56%
Capped All Share26,810.601520.57%
JSE TABACO 8,334.61-77-0.92%

Click here for the Sharenet Index Summary page
Latest Consensus Changes**
CodeCompany NameStatusUpdated
CLRCLOVER INDUSTRIES LTDHOLD20/03/2015
NPNNASPERS LIMITEDBUY19/03/2015
SABSABMILLER PLCHOLD18/03/2015
SOLSASOL LIMITEDBUY18/03/2015
APNASPEN PHARMACARE HLDGSBUY17/03/2015
Results Expected**
ExpectedCompany NameFin. Date
25/03/2015AFRO-CDecember 2014 (Interim)
25/03/2015AFROC-PDecember 2014 (Interim)
25/03/2015EHSVDecember 2014 (Final)
26/03/2015JDG CONVDecember 2014 (Interim)
26/03/2015JDGROUPDecember 2014 (Interim)

Recent Dividends**
Share NameDec-DateLDTPay-DateAmount
KAYDAV23/03/1508/05/1518/05/15ZAR 0.0500
ADVTECH23/03/1510/04/1520/04/15ZAR 0.1500
ELBGROUP20/03/1517/04/1528/04/15ZAR 0.3000
ANCHOR18/03/1501/04/1513/04/15ZAR 0.1200
CLOVER17/03/1501/04/1513/04/15ZAR 0.2260
Ex Div**
Share NameDec-DateLDTPay-DateAmount
ABSABANK-P03/03/1520/03/1530/03/15ZAR 32.1089
MTN GROUP04/03/1520/03/1530/03/15ZAR 8.0000
SANTAM02/03/1520/03/1530/03/15ZAR 4.8000
IMPERIALP24/02/1520/03/1530/03/15ZAR 3.8136
CASHBIL02/03/1520/03/1530/03/15ZAR 3.7600

Upcoming AGMs**
CodeCompany NameDateStatus
HDCHudaco Industries Ltd.27/03/2015Confirmed

Stock Exchange News Service
DateTimeHeadline
24/03/201517:50DELTA PROPERTY FUND LIMITED - Bookbuild by Delta and voluntary NAV update
24/03/201517:50IMPERIAL HOLDINGS LIMITED - Disclosure of Significant Holding in Imperial Ordina...
24/03/201517:40INTU PROPERTIES PLC - Confirmation of Dividend Payment Date and Offer of Scrip D...
24/03/201517:33JSE LIMITED - Disclosure of significant holding of JSE shares
24/03/201517:30PINNACLE HOLDINGS LTD - Disclosure of acquisition of securities
24/03/201517:30ORION REAL ESTATE LIMITED - Group's interim results for the six months ended 31 ...
24/03/201517:30TRUWORTHS INTERNATIONAL LIMITED - Directors dealings in the companys securities
24/03/201517:05SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Resi Portfolio -...
24/03/201517:05SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Swix Top 40 Port...
24/03/201517:04SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Rafi 40 Portfoli...
24/03/201517:03SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Indi Portfolio -...
24/03/201517:02SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Fini Portfolio -...
24/03/201517:01SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix Dividend Plus Po...
24/03/201517:00ANDULELA INVESTMENT HOLDINGS LTD - Reviewed provisional condensed consolidated f...
24/03/201517:00NASPERS LIMITED - Directors Dealings
24/03/201517:00NET 1 UEPS TECHNOLOGIES INC - South African Constitutional Court pronounces judg...
24/03/201517:00SATRIX COLLECTIVE INVESTMENT SCHEME - Rebalancing of the Satrix 40 Portfolio - S...
24/03/201516:57FIRSTRAND BANK LIMITED - FRC171-Partial Redemption
24/03/201516:45OLD MUTUAL PLC - Form 8.3 Disclosure
24/03/201516:30OLD MUTUAL PLC - Form 8.3 Disclosure
24/03/201516:30TSOGO SUN HOLDINGS LIMITED - Disclosure of beneficial interests in Tsogo Sun sec...
24/03/201516:00THE THEKWINI WAREHOUSING CONDUIT (RF) LIMITED - New Financial Instrument Listing...
24/03/201516:00INGUZA INVESTMENTS (RF) LIMITED - ING114-6 Partial Redemption
24/03/201516:00OLD MUTUAL PLC - Form 8.3 Disclosure
24/03/201515:55INTERWASTE HOLDINGS LIMITED - Reviewed condensed consolidated preliminary financ...
24/03/201515:54INTERWASTE HOLDINGS LIMITED - CANCELLATION OF S355766 Reviewed condensed consoli...
24/03/201515:45OLD MUTUAL PLC - Form 8.3 Disclosure
24/03/201515:30OLD MUTUAL PLC - Form 8.3 Disclosure
24/03/201515:15OMNIA HOLDINGS LIMITED - Dealings in securities by an associate of a Director
24/03/201515:00CROOKES BROTHERS LIMITED - Trading Statement
24/03/201514:51DISCOVERY LIMITED - Dealing in securities by a director of the Company
24/03/201514:45GOODERSON LEISURE CORPORATION LTD - Update on the sale of the SanRock Resort
24/03/201514:38IVUZI INVESTMENTS LIMITED - IVA513 - Full Capital Redemption
24/03/201514:35INTERWASTE HOLDINGS LIMITED - Reviewed condensed consolidated preliminary financ...
24/03/201514:15NASPERS LIMITED - Notification of Interest in Shares
24/03/201514:15JSE LIMITED - GEN - The Std Bank of SA Ltd - Financial Instrument Total Delistin...
24/03/201514:15ABSA CAPITAL - New Financial Instrument Listing - LPEGB8
24/03/201514:14NASPERS LIMITED - CANCELLATION OF S355751 Notification in terms of Section 122(3...
24/03/201514:00THE THEKWINI WAREHOUSING CONDUIT (RF) LIMITED - New Financial Instrument Listing...
24/03/201514:00THE THEKWINI WAREHOUSING CONDUIT (RF) LIMITED - New Financial Instrument Listing...
24/03/201514:00MURRAY & ROBERTS HOLDINGS LIMITED - Change to the Board
24/03/201514:00ANCHOR GROUP LIMITED - Clarification regarding recent media reports
24/03/201514:00THE THEKWINI WAREHOUSING CONDUIT (RF) LIMITED - New Financial Instrument Listing...
24/03/201513:15NASPERS LIMITED - Notification in terms of Section 122(3) of the Companies Act a...
24/03/201512:57FIRSTRAND BANK LIMITED - FRX26-Listing of Tap Issue
24/03/201512:41WESCOAL HOLDINGS LIMITED - Director dealings in securities
24/03/201512:10RAUBEX GROUP LIMITED - Trading Statement
24/03/201512:00ABSA BANK LIMITED - New Financial Instrument Listing - ASN052
24/03/201511:33ASTRAL FOODS LIMITED - Disclosure of Beneficial Interests in Shares
24/03/201511:00CAPITAL & COUNTIES PROPERTIES PLC - Notification Of Major Interests In Shares
24/03/201510:56HULAMIN LIMITED - Posting of circular relating to proposed broad-based black eco...
24/03/201510:50STANDARD BANK OF SOUTH AFRICA LD - SCIB: The Standard Bank Of South Africa Ltd D...
24/03/201510:48RANDGOLD & EXPLORATION COMPANY LTD - Summarised Group Financial Statements For T...
24/03/201510:47FIRSTRAND LIMITED - Dealing in securities by an associate of a director
24/03/201510:44NOVUS HOLDINGS LIMITED - Offer and Listing of Novus
24/03/201510:00CLOVER INDUSTRIES LIMITED - Dealing in securities by a director of a major subsi...
24/03/201510:00COGNITION HOLDINGS LIMITED - Voluntary Announcement Acquisition of a 63% Stake ...
24/03/201509:59STANDARD BANK OF SOUTH AFRICA LD - SCIB: The Standard Bank of South Africa Ltd -...
24/03/201509:38INVESTEC BANK LIMITED - Expiry Notice ESPIBV
24/03/201509:35THE WATERBERG COAL COMPANY LTD - WCC Receives Legal Claim
24/03/201509:30MPACT LIMITED - Dealings in securities by the Mpact Limited Incentive Scheme Tru...
24/03/201509:18ATTACQ LIMITED - Dealing in securities by an associate of a director of the comp...
24/03/201509:00BLACKSTAR GROUP SE - Result of Extraordinary General Meeting
24/03/201509:00BRITISH AMERICAN TOBACCO PLC - British American Tobacco appoints KPMG as Auditor...
24/03/201508:50TAWANA RESOURCES NL - Mofe Creek Project Update
24/03/201508:00CONDUIT CAPITAL LIMITED - Developments in relation to the Company, Reconstitutio...
24/03/201507:54CAPITEC BANK HOLDINGS LIMITED - Resignation Of An Independent Non-Executive Dire...
24/03/201507:05CAPITEC BANK HOLDINGS LIMITED - Summarised audited financial statements for the ...
24/03/201507:05SIBANYE GOLD LIMITED - Planned notice of AGM and No Change Statement

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