Oasis says global property yields remain attractive


Oasis says global property yields remain attractive

Published Date: 2017-10-25 | Source: Stephen Gunnion | Author: Stephen Gunnion

Oasis says global property yields remain attractive

SA office property has been affected by weak business confidence

The current dividend yield on global real estate investment trusts (REITs) to 10-year bond yield spreads remains attractive relative to their long-term averages. That's the view of Oasis Crescent Property Fund, which reported half-year results yesterday. Oasis says REITs with a high exposure to the major global cities, positive secular demand drivers, enhancing refurbishments and superior balance sheets are well positioned to outperform in a normalising interest rate environment.

In South Africa, Oasis says the demand for office space is linked to confidence and the employment outlook, which is going to take time to recover. In the industrial sector, the requirement for supply chain efficiency remains a positive longer-term driver of demand for logistics space but the low level of business confidence is impacting negatively on demand. Shopping centres that are appealing destinations or offer convenience are better positioned to grow their trading densities in a low growth environment.

Almost half of Oasis' portfolio is invested in direct property - including the retail, industrial and office sectors, with a high exposure to the Western Cape. Close to a third is in global listed property. It says this gives it geographical and currency diversification. The balance is in cash and other listed investments, which it says provides it with flexibility to pursue growth opportunities.

For the six months to end September, Oasis grew its distribution by 9.3% to 53.8c. It says it made good progress in reducing vacancies and improving the quality of its tenants. Investment income from its global investments increased by 2%, impacted by the rand strengthening by 8%.

Its shares ended the day unchanged at R20.30. It reported its results after the market had closed.

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