EDITORIAL: Listed property sector’s loss of credibility

SA’s listed property sector is drowning in a sea of problems.

Investors are rightly arguing that landlords and property fund CEOs need to revalue their assets in light of the weak economic conditions in SA and globally, especially in countries such as Poland and Romania. Global property services group JLL, Joshua Askew, a valuation expert, and Pepler Sandri, senior associate, told Business Day that unit prices are being inflated by artificially high valuations of trust’s assets.

And chances are the current valuations do not accurately reflect economic and market realities, especially for funds with big exposure to SA. Companies such as Sasol and Discovery have vacated smaller offices and consolidated into single, large offices while weak consumer spending has forced smaller boutique retailers to vacate shopping malls.rents have been contracting and there are shrinking escalation rates, which are annual percentage increases of rents. A virtual shutdown of economic activity to contain the rapid spread of the Covid-19 pandemic will worsen this situation.

Source: Loan Digest (loandigest.net)

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