SAPOA Archives - SA REIT

SAPOA Convention 2025 panel recap and what it means for South Africa’s REITs

South Africa’s listed property story is one of powerful cycles, resilience and renewal. From a market capitalisation of R3.8 billion in 1998 to more than R400 billion by 2017, the sector outperformed equities and bonds for long stretches before the 2020 correction erased as much as 70% of prices. The SAPOA Convention 2025 listed property panel unpacked this journey and drew a clear conclusion. While listed property is not a perfect proxy for the economy, it remains a credible barometer of real activity when dividend income, operating metrics and capital flows are properly accounted for.

SAPOA Convention 2025 listed property panel moderator Peter Clark (Founder, REdimension Capital) guided a frank conversation with Ian Anderson (Head of Listed Property and Portfolio Manager, Merchant West Investments and compiler of the informative SA REIT Chart Book), Kundayi Munzara (Executive Director & Portfolio Manager, Sesfikile Capital), Pranita Daya (Equity Analyst & Assistant Portfolio Manager, Truffle Asset Management) and Andrew Wooler (Chief Executive Officer, Burstone).

Their core message was measured but optimistic. Dividend growth is returning, balance sheets are better aligned to today’s rate environment and operating fundamentals are improving across many segments. Importantly, when dividends and reinvested income are included over time, no investor who stayed invested “lost money” in the sector. This is a powerful reminder that REITs are designed to channel recurring cash flows to investors, not to offer speculative punts on buildings.

What the cycle taught us

Anderson set the stage with a brief history of the capital super cycle that lifted the asset class for nearly two decades. The sector’s explosive growth was fuelled by income focused products that attracted household investors and by an era of abundant equity that culminated in 2015 to 2017. The correction that followed was severe, yet the recovery since late 2020 has been equally instructive. Listed property has regained leadership on a long horizon because income compounded through the downturn. The lesson is simple. Cash flow discipline beats price chasing.

A second lesson is that capital cycles differ by subsector. Convenience and township retail and logistics have proven more resilient. Office remains the laggard, yet the panel noted falling vacancies in select nodes such as Rosebank and Cape Town, early demand from business process outsourcing and a declining stock base. Patient capital that understands the clock may find value as conditions normalise.

Fundamentals first

Daya argued that on a dividend yield plus growth basis listed property screens well on a three-to-five-year view. Positive rental reversions are reappearing at quality assets, escalations are holding up where demand and supply are balanced and self-generated initiatives such as embedded solar have added durable revenue. Munzara expects low double digit total returns from direct property in South Africa over the cycle and believes listed vehicles can deliver slightly more because of professional asset management and governance.

Valuations remain a key talking point. On average the sector trades at a notable discount to reported net asset value, with wide dispersion across counters. The panel’s take was pragmatic. Private market evidence suggests book values are broadly sound, with an estimated R30 billion of assets sold at a slight premium to NAV in recent years by willing buyers and sellers. Where discounts persist, they often reflect leverage, asset mix, liquidity or a market view on management’s capital allocation record. Better disclosure and consistent definitions for metrics such as like-for-like growth and vacancies would help investors compare companies more cleanly.

Governance, alignment and data

There was strong agreement that governance has improved meaningfully. Crossholdings and related party complexities have reduced and reporting has matured. That said, panellists called for tighter alignment in remuneration and for simpler, standardised KPI definitions across REITs. Investors want transparent links between management rewards and long-term shareholder outcomes. They also want property level data that is comparable across portfolios. The industry has made progress, yet there is more to do.

Capital flows and the cost of money

Wooler noted that the cost of capital has reset globally. Easy equity has given way to a world where discipline in recycling capital, timing disposals and focusing on highest and best use is rewarded. Local banks remain willing lenders at competitive margins which supports private market transactions, yet disposal pipelines from REITs are likely to moderate after several busy years. The broader allocation question remains live. Property still accounts for a low single digit share of the JSE and of balanced portfolios. As policy risk recedes and the rate cycle turns, the panel is seeing growing investor engagement, but property must compete with attractive bond markets that also delivered double digit returns. That puts the onus on REITs to deliver credible, compounding earnings growth.

Why listed property still reads the real economy

Munzara made an important point about the economy that data often undercounts. A large informal sector feeds directly into retail and distribution performance, both of which are strongly represented in listed property cash flows. Industrial is increasingly geared to logistics rather than manufacturing which links it to consumption. Office reflects services sector health. Taken together, these channels make listed property a useful barometer of real activity provided investors look beyond share prices to the underlying cash generation.

Anderson summed up the outlook succinctly. Real dividend growth is returning for the first time in years as fundamentals improve, payout ratios normalise and interest rates ease. Add starting yields that remain elevated and double-digit total returns in the mid-teens are achievable on a three-to-five-year horizon.

The road ahead

The panel closed on a constructive note. Liquidity will always be lower than in banks or large caps and the sector will remain sensitive to capital cycles. Yet REITs have shown an ability to adapt. They have recycled assets, invested in operational efficiency, embraced renewable energy solutions and focused on tenant demand rather than speculative development. The result is a sector that is leaner, better governed and more attuned to investor needs.

For policymakers and city managers the message is equally clear. Credible local government, efficient basic services and predictable regulation are powerful enablers of REIT performance. For investors the takeaway is to focus on quality of cash flows, alignment of incentives and the discipline of capital allocation. For REIT executives it is to keep simplifying, keep standardising and keep telling the income compounding story that underpins the asset class.

Listed property is not the whole economy yet it remains a reliable barometer because it translates on-the-ground activity into cash that can be measured, distributed and reinvested. That is why a sector once written off in 2020 is again drawing interest. The signal from SAPOA 2025 is that the cycle has turned from repair to renewal. The work now is to turn renewed confidence into sustained, real returns.

Download Anderson’s presentation here.

SA REIT Conference 2026

The SA REIT Association’s biennial conference, proudly sponsored by Nedbank Corporate and Investment Banking’s Property Finance division, will take place on 12 February 2026 at The Houghton Hotel, Johannesburg.

This flagship event will convene REIT executives, investors, asset managers, policymakers and market experts to engage on the most pressing forces shaping the future of listed real estate. Topics will include global market volatility, access to capital, innovation, local government risks and the policy environment. With a focus on sector credibility and long-term investor relevance, the agenda promises strategic insight and practical direction.

A highlight will be the keynote address by Peter Verwer, Executive Chairman of Futurefy, titled Global REIT Dynamics: Innovation, Influence and Opportunity. He will explore how REITs worldwide are adapting to investor demands, digital transformation, sustainability imperatives and links to infrastructure and nation building. His perspective comes at a pivotal moment, following the relaunch of the Global REIT Alliance in Stockholm in September 2025.

Originally established in 2006 under the banner of the Real Estate Equity Securitization Alliance (REESA), the alliance has been revitalised under its new name to strengthen international collaboration, knowledge-sharing and industry advocacy. The SA REIT Association is a member of the Alliance.

Verwer’s address will provide valuable context for South Africa’s REIT sector within the global investment landscape.

SA REITs pause in September as sector readies for growth into 2026

Sector slips 0.3% despite stronger bonds and equities while dividend growth momentum continues

South African Real Estate Investment Trusts (REITs) recorded a marginal 0.3% decline in September, underperforming both equities (+6.6%) and bonds (+3.4%), according to the SA REIT Association’s September 2025 Chart Book. Despite this pause, the sector’s year-to-date return remains at 14%, broadly in line with the bond market, though well behind the equity market’s strong 31.7% advance.

“The subdued performance in September is notable given the sharp decline in long bond yields, a buoyant equity market and further signs that distributable earnings growth is accelerating into 2026,” says Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments and compiler of the Chart Book.

He adds: “Dividends across the sector are growing by close to 10% year-on-year, yet investors remain cautious about whether this acceleration will be sustained. However, the evidence increasingly supports ongoing double-digit dividend growth into 2026.”

September by the numbers

SA REIT sector: -0.3% in September, +14% year-to-date
Equities: +6.6% in September, +31.7% year-to-date
Bonds: +3.4% in September, +14.0% year-to-date
Dividends: Sector-wide growth of close to 10% year-on-year
New equity raised in 2025: Just under R4 billion

Results momentum builds across the sector

September saw several key companies release results to end-June 2025.

Growthpoint surprised on the upside with distributable income up 3.1%. Despite disposing of 24 properties worth R2.3 billion and reducing its gross lettable area by over 5%, net property income in its core South African portfolio rose 5%. Management raised the dividend payout ratio to 85%, lifting the dividend 6.1%, well above market consensus. Guidance for FY26 remains conservative while dividends are still expected to grow 6% to 8%.

Fortress delivered a 7.1% dividend increase in FY25. Supported by improving property fundamentals, a robust development pipeline and lower interest rates, management forecasts further growth of 6% to 7.5% in FY26.

Hyprop reported strong operating performance in both South Africa and Eastern Europe. Its FY25 dividend rose 9.9%, with guidance for distributable income growth of 10% to 12% in FY26. The upbeat tone from management represents a shift from their cautious outlook of recent years.

Beyond the large caps, Attacq, Heriot, SA Corporate, Safari and Texton also released better-than-expected results, while Fairvest and Vukile issued positive trading updates. Dipula successfully raised R559 million through an accelerated bookbuild in early September, funding its acquisition of Protea Gardens Mall in Soweto alongside four additional smaller assets.

Investor sentiment shows signs of recovery

Investor confidence in the listed property sector continues to improve. Roughly R4 billion of new equity has already been raised in 2025. While this is still well below the R30 billion annual average raised between 2015 and 2017, it represents a significant rebound from the R8 billion of net new equity raised across the entire period between late 2019 and early 2025.

“This is increasingly a story of returning investor confidence,” indicates Anderson. “The ability to raise capital again at competitive levels, alongside sharply lower borrowing costs, provides the sector with the resources to return to external growth. Acquisitions, redevelopments and greenfield developments are once again feasible, with the potential to accelerate income and dividend growth.”

For example, Growthpoint Healthcare Property Holdings, managed by Growthpoint Investment Partners, the fund management business of Growthpoint, has recently announced that it has entered into an agreement to acquire the properties and operations of Auria Senior Living, a developer, owner and operator of senior living communities in South Africa.

The sector’s transformation over the past five years has been marked by defensive measures: Balance sheet management, recycling capital and optimising portfolios. With these foundations now stronger, listed property is positioned to deliver earnings growth above inflation and renewed capital appreciation.

Outlook: Poised for a new growth phase

Anderson notes that while short-term prices can move on sentiment, interest rates and liquidity, long-term capital growth ultimately depends on sustainable earnings and cash flow.

“South Africa’s REIT sector is entering a period of inflation-beating earnings growth, which is not yet fully reflected in most share prices. This creates an opportunity for investors who recognise the sector’s improving fundamentals.”

The positive outlook for the sector was echoed at the SAPOA Convention 2025 at Sun City on 2 October during the panel Listed property – the real economy’s barometer. Anderson opened the discussion with an overview on resilience and growth prospects in the sector. He was joined by Kundayi Munzara, Executive Director and Portfolio Manager at Sesfikile Capital, Pranita Daya, Equity Analyst and Assistant Portfolio Manager at Truffle Asset Management and Andrew Wooler, Chief Executive Officer of Burstone. Moderated by Peter Clark, Founder of REdimension Capital, the discussion highlighted fundamentals, discipline and the role of direct property as a true barometer of the economy. The panel confirmed that listed property is regaining relevance as a clear indicator of South Africa’s real economy.

The full September 2025 Chart Book is available for download on the SA REIT Association website.

SA REIT Conference 2026

A highlight will be the keynote address by Peter Verwer, Executive Chairman of Futurefy, titled Global REIT Dynamics: Innovation, Influence and Opportunity. He will explore how REITs worldwide are adapting to investor demands, digital transformation, sustainability imperatives and links to infrastructure and nation building. His perspective comes at a pivotal moment, following the relaunch of the Global REIT Alliance in Stockholm in September 2025.