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STANLIB Global Property Fund - News
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Stanlib Global Property Fund - Sep 19
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Monday, 9 December 2019
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Fund Manager Comment
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Fund review
Following a 2Q19 performance of 1,07%, the fund delivered a 5,11% total return in USD for 3Q19 compared with a USD benchmark return of 6,16%. Our overweight positions in US residential (Equity Residential and Essex Property), and Japanese industrial specialists (GLP and Nippon Prologis) demonstrate the outperformance generated by the fund, but the majority of the fund’s overweight holdings outperformed the benchmark following strong 2Q/interim results. Additional outperformance was generated by underweight positions in retail property and lodging (hotels) both of which continued to underperform the index. The fund’s overweight positions in German residential companies were a drag on performance as concerns continued to weigh on share prices, following Berlin’s parliament approving in principle a five-year rent freeze. From a country perspective, ‘safe haven’ markets including the US, Japan, Sweden and Switzerland (together, 75% of the index) drove the index and Fund higher.
Market overview
Global REIT markets rallied on the back of increased expectations of lower for longer interest rates as well as improved sentiment following a perceived easing in China-US trade tensions. In addition, Q2 and interim results continued to meet or exceed expectations, with guidance pointing to robust operating performances (except for retail and lodging/resort REITs) for the rest of the year.
US and Canadian property markets continue to benefit from relatively buoyant economic conditions driving up demand across all property subsectors (except retail and lodgings/resorts) while supply remains at or below historic average levels. As a result, REITs continued to report steady growth in earnings, with cautious optimism about the rest of the year and 2020. Balance sheets are healthy in aggregate and liquidity remains high, with over $340 billion of private equity capital available for investment.
European property markets prospects continue to diverge. The structural demand for industrial assets continues unabated across all regions, reflecting the relentless rise of online shopping. The demand/supply imbalance driving rental growth is also marked in various residential markets such as Germany, Sweden and the Netherlands. UK and European retail property continue to see a structural reduction in the demand for space. The multi-year negative impact of this trend continues to affect UK high streets and Western European shopping centres the most, with landlords having to generate more cost efficiencies and increase incentives for a shrinking number of tenants. Paris and Madrid office markets continue to benefit from strong demand/supply imbalances while niche property markets such as healthcare and student housing are showing growing rental values due to structural growth factors, driving strong performance across Scandinavia, Benelux, Ireland and even in the UK.
In Asia, the focus was on Hong Kong as the city continued to suffer from negative sentiment following civil unrest due to the Chinese extradition bill (that is expected to be withdrawn in October) and concerns over the city’s autonomy in the medium term. Singapore’s underlying property markets continue to benefit from robust occupier demand and weak growth in supply. In Japan, positive momentum continues in the country’s main city office, retail and industrial markets, with vacancy levels at record lows and rental growth expectations throughout these sectors. Australia’s consumer spending rate is tapering off, which is continuing to weigh on the retail and residential markets, while the main cities’ industrial markets continue to grow in line with the global trend of growth in online retail.
Looking ahead
In Q4, we will be watching our underweight exposure to the UK more closely given the Brexit deadline of 31 October. We expect increased investor concerns regarding a global economic slowdown to continue to polarise sector share price performance prospects. More defensive subsectors and countries are likely to continue to outperform in this context. Valuation yields, while cyclically high, are more reasonable in relative terms and therefore are likely to continue to be supported by the risk premium vs reference bonds and lower re-financing costs from lower interest rates. In 3Q19, we reduced our exposure to Hong Kong companies in favour of European industrial and office specialists. We continue to gradually tilt the fund to reflect our view that the best offence is defence at the moment. Following a 6.1% total return in USD in Q3, on average, global listed property was trading broadly in line with reported net asset values and now offers a one-year forward average dividend yield of just under 4%, taking into account a forecast 5% growth in earnings. Wwe expect REITs’ underlying results to continue to perform through to the reporting season in Q1 2020.
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STANLIB Global Property Fund comment - Mar 2019
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Tuesday, 11 June 2019
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Fund Manager Comment
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Fund Commentary: 1st Quarter
Fund Overview
The fund delivered a 13.79% return for the first quarter of 2019 compared with a benchmark return of 14.48%. Over the past 12 months, the fund’s return was +12.7%, versus the benchmark’s +15.1% return. The fund returned -1% in the nine months preceding 1Q19, with most of the 12-month returns earned in 1Q19. The change in benchmark was successfully undertaken in 4Q18, with the fund now increasingly comparable with its global peers. 1Q19 saw a material upward progression in returns, when a broad market rally was a key feature.
Out of a universe of 312 stocks, only 10 delivered a negative total return in 1Q19, with almost 150 stocks outperforming the benchmark return of 14.5%. From a stock perspective, in 4Q18 our overweight exposure to Prologis (logistics) detracted from performance. Prologis represents our largest overweight exposure. In 1Q19 Prologis delivered 23.4% (in US dollars), outperforming the benchmark and contributing materially to performance. Our material overweight in Goodman Group (logistics) also positively impacted our 1Q19 performance, while exposure to Deutsche Wohnen (German residential) detracted from performance. From a country perspective, our underweight position in the US and marginal overweight position in Japan detracted from our performance, while our Australian overweight position and underweight position in the UK contributed positively.
Market overview
With the fund benchmark weighted 57% towards the US, the broad US REIT rally evidenced in 1Q19 was tough for the fund to shrug off. We continue to position the fund with a bias towards physical portfolio quality and defensiveness in our stock selection, with broad momentum market rallies unlikely to benefit the fund. A key driver of the broad market rally in 1Q19, particularly in the US REIT sector, was a combination of a correction to the material sell-off evident in late 4Q18 across all equity markets and the US Fed increasingly taking a dovish tone in the latter half of 1Q19. Both of these events led to broad rallies in the REIT sector, with current market expectations now suggesting two rate hikes in 2019 are less probable. A pause in the hiking cycle is anticipated to extend until mid-2020. As US 10-year bond yields fell from 2.7% to 2.4% during 1Q19, we believe market concerns eased that economic data might start to weaken materially, cap rates may rise or finance costs will
increase in 2019.
There were no major changes to property fundamentals in the various markets and sectors, other than a further cooling of expectations that the US will imminently raise interest rates. The fund continues to remain overweight towards Europe (with a specific focus on Germany) and Australia. It has a selectively underweight position towards the US and UK. On France and Singapore, the overall positions are largely neutral.
Looking ahead
Global listed property is trading at a discount of about 6% to current net asset value and is offering a one-year forward dividend yield of 3.6%, assuming 5.4% earnings growth. Concerns around trade wars, geopolitical tensions, US and UK political uncertainty and the accompanying ramifications, could continue to cause some volatility in the short term. Fundamentally, we believe property is well supported by positive economic growth prospects across nearly all developed markets, with low funding rates supporting continued positive growth in earnings. In 1Q19, we further mitigated our risk to retail exposure, particularly relating to companies which do not represent flagship retail. Our fund’s exposure reflects our view that defensive property exposure, with a clear focus on risk mitigation, is the correct strategy at present. We encourage investors to take a three- to five-year view.
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Stanlib Global Property Fund comment - Mar 16
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Wednesday, 15 June 2016
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Fund Manager Comment
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Fund Review
The global property portfolio returned 4.59% during the quarter underperforming its benchmark. The US had the biggest negative attribution, mostly due to the overweight position in SL Green Realty Corp, which has big exposure to the New York City office market, and the underweight position in Realty Income Corp. The overweight allocation to the UK also detracted from portfolio relative returns. The portfolio will remain overweight the New York Office market as there is no solid evidence yet of an entrenched slowdown in that market.
Market Overview
After a volatile start to the year, REITs in developed markets rallied more than 15% from the lows in the quarter after global sentiment changed in the middle of February and credit spreads tightened back to levels seen at the end of 2015. REITs in developed markets returned about 6.7% total return in USD (1.2 % in ZAR) for the first quarter of 2016. The best performing regions was Canada, Japan and Australia. The UK performed the worst, weighed down by uncertainty around the outcome of the EU referendum to be held later this year. Hong Kong REITs staged a strong rally in March after a reprieve from the US Fed pushing out further rate hikes in the US. Retail sales in Hong Kong remains weak and economic growth is expected to slow. The Singapore office market is still under pressure from weak demand and expected new supply. In the US, the office sector was the worst performing due to perceived concerns around the New York City office market and specialty sectors such as data centers, storage and student housing outperformed. Japan listed property performed very well after unexpected quantitative easing by the Bank of Japan. Listed property in all the regions outperformed their respective domestic equity markets, except for Hong Kong and the UK.
Looking Ahead
Overall property fundamentals in the US and UK are still good, underpinned by healthy demand and manageable new supply across sectors. There is a risk that the UK will vote to exit the European Union which could cause severe volatility for the region. A UK exit is not the most likely outcome and UK REITs can be expected to re-rate strongly after the vote, all else remaining equal. Higher interest rates may negatively impact the ability of commercial real estate owners to roll-over maturing debt. Elevated levels of commercial mortgage debt will mature in 2016 and 2017 in the US. Property values in general may be re-priced lower if the availability of debt decreases. Listed REITs have better access to capital and a bias to better quality assets but will not be immune to any debt induced volatility. According to UBS Research global REITs are currently trading at a 7% premium to NAV. The portfolio has an implied dividend yield of about 3.8%, which remains very attractive relative to government bond yields and money market yields too.
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Stanlib Global Property Fund comment - Jun 14
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Monday, 15 September 2014
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Fund Manager Comment
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Market overview
The UBS Investors Index returned around 9.4% in ZAR for the second quarter. US 10 year treasury yields continued to move lower, ending the quarter around 2.5%. The strength in bonds was the main driver of performance during the quarter with the Federal Reserve actions remaining highly supportive of the bond market despite the tapering of bond purchases. The best performing regions were Japan, Australia and Continental Europe. Listed property in Europe was boosted by the possibility of Quantitative Easing in the region, evidenced by declining bond yields and swap rates. The worst performing regions were UK and North America.
Portfolio overview
The portfolio has returned 13.7% in dollars during the first six months of 2014, after doing 6.89% in the last quarter to end March. So 2014 is turning out to be a very good year so far, after a difficult 2013.
The underlying portfolio underperformed largely due to cash drag in a rising market, allocation to Brazil and stock selection in North America. Stocks that detracted the most from portfolio relative return were BR Mall Participacoes SA, Tanger Factory Outlet Centers and Fonciere Des Regions. Japan, Hong Kong and Philippines made the biggest contribution to portfolio relative return. The underlying portfolio held an average cash balance of around 2.5% for the quarter.
Outlook
There has been an increased positive correlation between global listed property and bond prices in recent times. This suggests that price performance over next 12 months will be more dependent on the direction of US treasury yields and actions at the Federal Reserve and other central banks. Bottom up research according to UBS Research suggests positive earnings growth over the next 12 months with global listed property Investors currently trading more or less in-line with net asset value. The estimated implied forward dividend yield for the portfolio is around 3.6%.
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Stanlib Global Property Fund comment - Mar 14
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Friday, 6 June 2014
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Fund Manager Comment
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Market overview
The UBS Global Investors index returned around 7.1% (USD Total Return) for the first quarter of 2014. The best performing regions were North America, UK and Australia with Hong Kong, Japan and Singapore performing the worst. On a global basis Real Estate Investment Trusts (REITs) significantly outperformed property developers with the US 10-year treasury yield compressing again to levels seen in the final quarter of 2013. This move in bond yields was driven largely by a capital flight from emerging markets and a slowdown in US growth in the first quarter. In the US, residential and industrial REITs performed the best while the retail and hotel sectors underperformed. The UK continued the strong performance from the previous quarter with residential and office REITs performing best. The residential sector was also the best performing sector in Europe. Concerns around the end game for a likely credit bubble China dragged on performance of Asia listed property. Japan property developers declined significantly with the Yen appreciating. The best performing stocks in the benchmark overall were Ashford Hospitality and Beni Stabili SPA. Wharf Holdings Ltd was the worst performing stock.
Portfolio overview
The US and Brazil made the biggest contribution to portfolio relative return. The US had positive attribution despite the underweight allocation with good stock selection among residential and office REITs. BR Malls had a strong performance after reporting solid results during the quarter posting double digit growth in rents. Good stock selection in UK and Germany also contributed to portfolio relative return. Rental growth in the London office market remains robust and we remain overweight the theme. The biggest detractor to portfolio relative return was from holding cash. The average cash balance during the quarter was around 4.7%. The portfolio had net cash outflows for the quarter.
Outlook
REITs, especially in the US, benefitted to some extent from the fall out in emerging markets as bond yields moved lower on a flight to safety. This trade will likely reverse if US 10-year treasury yields move back above 3% on improved global growth. With the increased correlation between bond yields and REITs witnessed over the last quarter, a spike in bond yields remains one the biggest risks in the near term. Short-term interest rates will most likely stay low for the remainder of the calendar year. Valuations of REITs in the US remain somewhat expensive relative to other regions. At the end March UBS real estate investors was trading around a 2.6% discount to net asset value. The implied forward yield for the portfolio is around 3.7%.
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Stanlib Global Property Fund comment - Sep 13
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Thursday, 2 January 2014
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Fund Manager Comment
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Market overview
Global Listed Property ended down 3.7% (USD total return) for the second quarter of 2013, after a rally of more than 8% during the quarter, underperforming both Global Equities and Global Bonds. Listed Property Investors, defined as property companies that derive more than 70% of earnings from rental income, returned -3.7% for the quarter, while Listed Property Developers returned -3.2%. US Treasury yields jumped close to 100bps from a bottom in early May, on a global selloff of yield oriented investments and emerging markets in general. This move was driven by investors weighing a possible tapering of monetary easing in the US. Looking at the returns of Listed Property Investors by region (in USD), the best performing regions were the UK and Continental Europe. The worst performing region was Japan, down more than 18% for the quarter. The best performing stocks for the quarter overall was Capital and Counties (UK) and Technopolis OYJ (Europe). The worst performing stocks were IVG Immobilien (Europe) and Nomura Real Estate office Fund (Japan).
Portfolio overview
The biggest detractor to portfolio relative return was from off- benchmark holdings, mainly due to currency effect as the US Dollar strengthened over the quarter relative to most other currencies, especially those in emerging markets. The valuations for off-benchmark holdings remain compelling at current levels. With regards to other holdings, the regions that made the biggest contribution to portfolio relative return was Japan and North America with valuations in these regions now at more reasonable levels. The portfolio had an average cash balance of around 1.9% for the quarter.
Outlook
Listed property fundamentals remain healthy but negative sentiment will weigh on listed property in emerging markets in the near term. Positive earnings growth for the global listed property universe is expected. There is a high correlation between global listed property earnings growth and global GDP growth. Global GDP growth is expected to slow as growth in emerging and developed markets converge. Interest rates globally have probably bottomed as the US economy seems to be slowly but steadily recovering. The impact of higher interest rates on earnings will be muted over the near term as a high proportion of the debt of global listed property companies are fixed. Some of the biggest risks to the outlook include higher US Treasury yields, monetary tightening, a rotation out of yield oriented investments on a significantly faster than expected economic recovery and a credit crisis in China. Japanese retail investors are big holders of global listed property and could be forced to sell if they are impacted by a sudden and big change in financial markets such as a spike in bond yields. Global Listed Property Investors are currently trading at a discount to NAV of around 4.2%. The portfolio has an implied forward yield of around 3.9%
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Stanlib Global Property Fund comment - Jun 13
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Friday, 20 September 2013
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Fund Manager Comment
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Market overview
Global Listed Property ended down 3.7% (USD total return) for the second quarter of 2013, after a rally of more than 8% during the quarter, underperforming both Global Equities and Global Bonds. Listed Property Investors, defined as property companies that derive more than 70% of earnings from rental income, returned -3.7% for the quarter, while Listed Property Developers returned -3.2%. US Treasury yields jumped close to 100bps from a bottom in early May, on a global selloff of yield oriented investments and emerging markets in general. This move was driven by investors weighing a possible tapering of monetary easing in the US. Looking at the returns of Listed Property Investors by region (in USD), the best performing regions were the UK and Continental Europe. The worst performing region was Japan, down more than 18% for the quarter. The best performing stocks for the quarter overall was Capital and Counties (UK) and Technopolis OYJ (Europe). The worst performing stocks were IVG Immobilien (Europe) and Nomura Real Estate office Fund (Japan).
Portfolio overview
The biggest detractor to portfolio relative return was from off- benchmark holdings, mainly due to currency effect as the US Dollar strengthened over the quarter relative to most other currencies, especially those in emerging markets. The valuations for off-benchmark holdings remain compelling at current levels. With regards to other holdings, the regions that made the biggest contribution to portfolio relative return was Japan and North America with valuations in these regions now at more reasonable levels. The portfolio had an average cash balance of around 1.9% for the quarter.
Listed property fundamentals remain healthy but negative sentiment will weigh on listed property in emerging markets in the near term. Positive earnings growth for the global listed property universe is expected. There is a high correlation between global listed property earnings growth and global GDP growth. Global GDP growth is expected to slow as growth in emerging and developed markets converge. Interest rates globally have probably bottomed as the US economy seems to be slowly but steadily recovering. The impact of higher interest rates on earnings will be muted over the near term as a high proportion of the debt of global listed property companies are fixed. Some of the biggest risks to the outlook include higher US Treasury yields, monetary tightening, a rotation out of yield oriented investments on a significantly faster than expected economic recovery and a credit crisis in China. Japanese retail investors are big holders of global listed property and could be forced to sell if they are impacted by a sudden and big change in financial markets such as a spike in bond yields. Global Listed Property Investors are currently trading at a discount to NAV of around 4.2%. The portfolio has an implied forward yield of around 3.9%
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Stanlib Global Property Fund comment - Mar 13
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Thursday, 30 May 2013
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Fund Manager Comment
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Market overview
Global Listed Property Investors returned around 7% (USD Total Return) for the first quarter of 2013. Japan was the best performing region by far, rallying more than 36% on aggressive monetary easing by the Bank of Japan. The next best performing region was Hong Kong with a total return of around 7% for the quarter, outperforming Property Developers in the region as China announced further policy tightening to tame rising residential property prices. North America also had a good quarter despite expensive valuations as the recovery in the region seemed to gain further traction. The worst performing regions was the UK with total return of around -4.2% followed by Continental Europe (-2.6%). The problems in Europe seem to be far from over as some banks in Cyprus ran into financial trouble.
The best performing stocks overall were Daiwa Office Investment Corporation (Japan) and Activia Properties Inc (Japan), both up more than 50% for the quarter. The worst performing stock overall were IVG Immobilien AG (Germany), down more than 66% on disappointing results and announcement of a restructuring of the business. Nieuwe Steen Investments NV (Netherlands) was down close to 18% as the company still tries to grow its struggling property portfolio.
Portfolio overview
Europe and Australia made the biggest contribution to portfolio relative return with Nepi and Growthpoint Australia having the biggest attribution. Underweight allocations to North America and Japan were the biggest detractors to portfolio relative return with Simon Property Group and Omega Healthcare Investors having the biggest negative attribution. Healthcare REITs in North America had a strong rally during the quarter while large cap listed property underperformed the smaller stocks as more money flowed into listed property stocks with secondary quality properties and higher yields. Also, aggressive monetary easing around the globe is causing most markets to rise despite valuations. JREIT valuations are looking stretched. The portfolio had an average cash balance of around 4.6% for the quarter.
Outlook
Policy response around the world remains supportive for listed property and new supply is still constrained across most property sectors. The aggressive policy easing by the bank of Japan will likely prove to have been another turning point for the world economy, although the question whether it will bring Japan out of deflation without breaking anything else in the process remains, despite assurances that "this time is different". The Yen is also at risk of significant devaluation which will impact the global economy in some way. The global property universe, which includes Property Investors and Property Developers, is trading at a slight discount to NAV although finding value within Property Investors is becoming more difficult. Expected earnings growth for 2013 is around 4.6% for the property universe.
The portfolio has an implied forward yield of around 3.6%.
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Stanlib Global Property Fund comment - Dec 12
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Wednesday, 29 May 2013
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Fund Manager Comment
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Global Listed Property Investors returned c. 4.1% (USD Total Return) for the third quarter of 2012. The best performing region was Singapore followed by Hong Kong, Japan and Australia. The worst performing region was North America followed by Europe and the UK. Property Developers significantly outperformed Property Investors after the Fed announced QE3. Yield compression continued in the Singapore listed property market, initially driven by a quest for capital preservation on perceived strength of Singapore's economy relative to other developed markets. Hong Kong has also been strong on the expectation for further policy easing. Japanese listed property was boosted towards the end of the quarter when the Bank of Japan unexpectedly expanded its asset purchase fund by 10 trillion yen. In the US there were more signs that the housing market is gaining traction. US REITs lagged since the announcement of QE3 despite a drop in bond yields as investors likely sought higher growth assets. Listed property in Europe also recovered in line with the broader equity market on the promise of further stimulus. The best performing stocks overall were Fortune REIT, Singapore Land and Charter Hall Group. The worst performing stocks were Commonwealth REIT, Wereldhave NV and Dupont Fabros Technology. The best performing sector was Industrials and Diversified and the worst performing Residential. Global listed property investors are currently trading at a slight premium to NAV.
The biggest contribution to portfolio return was from Wharf Holdings, New Europe Property Investments, Link REIT and Westfield Group. The biggest detractor to portfolio return was from Equity Residential and Simon Property Group. North America and Europe made the biggest contribution to total attribution with Japan and Australia the biggest detractors. The portfolio had an average cash balance c. 2.5%.
Global economic growth is slowing and interest rates will like stay low for longer as central banks around the world respond to support the economy. Earnings growth for global listed property will likely soften on average but are expected to remain positive. Global macroeconomic risks remain unresolved but the outlook for global listed property remains positive as the asset class benefits from investors chasing yield. The portfolio has a forward yield of around c. 3.9 %.
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Sector Changed
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Monday, 11 March 2013
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Official Announcement
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The fund changed sectors from Global--Equity--Varied Specialist to Global--Real Estate--General on 11 Mar 2013. The fund was allocated to the correct sector.
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Stanlib Global Property Fund comment - Sep 12
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Tuesday, 20 November 2012
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Fund Manager Comment
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Global Listed Property Investors returned c. 4.1% (USD Total Return) for the third quarter of 2012. The best performing region was Singapore followed by Hong Kong, Japan and Australia. The worst performing region was North America followed by Europe and the UK. Property Developers significantly outperformed Property Investors after the Fed announced QE3. Yield compression continued in the Singapore listed property market, initially driven by a quest for capital preservation on perceived strength of Singapore's economy relative to other developed markets. Hong Kong has also been strong on the expectation for further policy easing. Japanese listed property was boosted towards the end of the quarter when the Bank of Japan unexpectedly expanded its asset purchase fund by 10 trillion yen. In the US there were more signs that the housing market is gaining traction. US REITs lagged since the announcement of QE3 despite a drop in bond yields as investors likely sought higher growth assets. Listed property in Europe also recovered in line with the broader equity market on the promise of further stimulus. The best performing stocks overall were Fortune REIT, Singapore Land and Charter Hall Group. The worst performing stocks were Commonwealth REIT, Wereldhave NV and Dupont Fabros Technology. The best performing sector was Industrials and Diversified and the worst performing Residential. Global listed property investors are currently trading at a slight premium to NAV.
The biggest contribution to portfolio return was from Wharf Holdings, New Europe Property Investments, Link REIT and Westfield Group. The biggest detractor to portfolio return was from Equity Residential and Simon Property Group. North America and Europe made the biggest contribution to total attribution with Japan and Australia the biggest detractors. The portfolio had an average cash balance c. 2.5%.
Global economic growth is slowing and interest rates will like stay low for longer as central banks around the world respond to support the economy. Earnings growth for global listed property will likely soften on average but are expected to remain positive. Global macro-economic risks remain unresolved but the outlook for global listed property remains positive as the asset class benefits from investors chasing yield. The portfolio has a forward yield of around c. 3.9%.
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Stanlib Global Property Fund comment - Jun 12
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Thursday, 23 August 2012
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Fund Manager Comment
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The benchmark returned 3% (in USD on a total return basis)for the second quarter of 2012, outperforming equities and bonds as investor interest in listed property remained strong and the search for secure income streams continued. Looking at listed property performance over the quarter, the regions that outperformed was Australia, Singapore and North America with Continental Europe the worst performing region followed by Japan, UK and Hong Kong. Australian REITs performed well and have attractive dividend yields and financial position while monetary easing during the quarter provided some stimulus for the domestic economy. US REIT valuations are looking stretched but the region was likely seen as a "safe haven" during the quarter as the Euro crisis dragged on. European listed property fundamentals will likely soften further in the third quarter. In the UK, Great Portland Estates PLC which focuses on the central London office market, benefitted from strong demand for investment for London property and has been the best performing listed property company for the region over the quarter. The best performing sector across listed property in developed markets was Diversified, followed by Retail, Office and Residential with Hotels and Industrial the worst performing.
The biggest contribution to portfolio return was from Simon Property Group, Public Storage, Ventas Inc and Westfield Group. The biggest detractor to portfolio return was from Prologis Inc., an investor in prime industrial properties across America, Europe and Asia. The portfolio had an average cash balance of 6.8%. During the quarter the portfolio had significant cash inflows.
REITs greatly benefit from the current low interest rate environment, especially in the US. In general REITs continue to benefit from the lack of new supply across all sectors and markets, low levels of new construction and better access to capital than private owners of commercial property. REITs have stronger balance sheets compared to 2008 and 2009 which will help weather macro-economic storms. Market turmoil will likely continue through the second half of 2012. Positive earnings growth for global listed property is expected. Currency can make a big difference in performance of the portfolio and this will remain a risk going forward. The portfolio (excluding cash) has a forward yield of 4%.
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Stanlib Global Property Fund comment - Mar 12
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Friday, 1 June 2012
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Fund Manager Comment
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Fund Review
The UBS Global Investors Index returned 11.4% for the first quarter of 2012 (USD Total Return). Property Developers significantly outperformed Property Investors over the period, with Singapore Developers up more than 40% on rotation to laggard sectors. Looking at Property Investors, the best performing regions were Singapore followed by Hong Kong, the UK and Europe. The worst performing regions were Australia followed by North America and Japan. The best performing sector were Industrial with Diversified and Residential the worst performing. The biggest contribution to index performance was from Simon Property Group, Prologis Inc and Westfield Group. Gagfah SA, a residential investor in Germany was one of the best performing stocks for the quarter on the back of settlement of the legal dispute with City of Dresden and the announcement of another share buy-back plan, the second share buy-back for the company in six months. The worst performing stock over the period was Stockland, a residential developer in Australia, on the back of deteriorating sentiment in the Australian residential sector and disappointing company results.
Portfolio Review
The portfolio outperformed the benchmark for the period under review. The biggest contribution to outperformance was from good stock selection in North America, Japan and the UK. The biggest detractor to outperformance was from cash holdings, followed by stock selection in Europe, Hong Kong and Singapore. Underperformance in Europe was mainly due to the overweight position in Alstria Office Fund, an investor in German office properties. In Singapore the underperformance was mainly due to the underweight position in Global Logistic Properties, a provider of logistic facilities in Asia. The underweight position in HCP Inc made the biggest contribution to outperformance followed by the overweight position in Prologis Inc. The portfolio had an average cash balance of 2.2% during the period.
Outlook
The outlook for Global Property remains positive, although concerns over rising oil prices, Spain's debt levels and slower growth from China may bring additional volatility. REITs have stronger balance sheets compared to 2009 and have staggered debt maturity profiles over the last few years. Historically low interest rates will support cap rates which may see even further compression for prime assets in major markets. In general REITs will continue to benefit from the lack of new supply across all sectors and markets, low levels of new construction and better access to capital versus private owners of commercial property. The portfolio has a forward yield of 4%.
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Stanlib Global Property Fund comment - Sep 11
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Monday, 21 November 2011
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Fund Manager Comment
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Market Overview
Global Listed Property posted a negative return during the period which was more or less in-line with the performance of Global Equities. The major driver of this performance was once again global macroeconomic concerns and its implications for Global Property. The performance of Global Listed Property was characterised by a sharp sell-off in early August, followed by a volatile downward trend to the end of the period.
The worst performing regions were Hong Kong, the UK and Continental Europe and the best performing regions were Japan, North America, Australia and Singapore.
Fund Performance
Cash holdings of c. 2.8% during the period made the biggest contribution to attribution followed by good stock selection in Europe and Australia. All other regions but Japan had a slightly positive total attribution. Japan had slightly negative attribution. The best performing sectors were Residential, Diversified and Retail with Hotels, Industrials and Office performing the worst.
Outlook
Global Listed Property is trading at a discount to NAV but does not seem to be pricing in a recession yet. Slower than expected rental growth and insufficient access to debt capital are the major risks. Bar a global recession, strong flows into listed property should continue, supported by the low interest rate environment in major regions of the developed world. A declining beta relative to equities also makes a case for Global Listed Property
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