Last year SA real estate investment trusts (Reits) outperformed all other asset classes, delivering a 35% return, while the broader equity market returned 13% and the bond market gained 17%. Some of the best annual growth figures in the diversified Reits segment in 2024 were Attacq (60.57%), Growthpoint (21.83%) and Redefine (29.61%). The 2024 surge follows five years of mostly poor performance after a precipitous fall in revenues during the Covid pandemic and because of load shedding, especially in 2023. By late 2023, the five biggest Reits on the JSE had lost more than R100 billion in value compared with 2018. The S&P Composite Index, which tracks South African Reits, fell by a third over this period
Reits are a relatively new investment instrument on the JSE. They were introducedin 2013 to allow individuals and companies to invest in income-producing property funds by owning shares rather than having to manage the ‘bricks and mortar’ property itself. This required an amendment to the Income Tax Act to provide ‘flow through’ on a pre-tax basis.
Reits enjoy tax benefits, the most important of which is that tax on dividends is paid bythe shareholder, not the Reit itself. To maintain its status, a Reit must pay at least 75% of its distributable earnings in the form of dividends. SA Reits are allowed to invest internationally, and a key part of the value proposition of each Reit is where it holds property and in what sub-sectors (commercial, industrial or residential).
Reits were an attractive investment category for the first seven years of their existence,offering predictable returns based on the stability of the property market. ‘Prior to Covid, Reits had little problem attracting investors,’ says Ian Anderson, head of listed property at Merchant West Investments. Anderson compiles the SA Reit Association’s monthly chartbook. Performance of individual companies did vary during this period, but Reits were generally very popular, especially with institutional and international investors. By 2016, there were five Reits in the JSE’s Top 40 Companies Index.
However, in 2020, the Covid pandemic decimated prices in the sector. ‘There was a double whammy,’ says Anderson. ‘The Covid lockdown saw shopping malls, industrial estates and offices close. Income in the property sector is typically a base rental plus a percentage of turnover, and turnovers came under massive pressures at that time,’ he says.
In SA this was exacerbated by load shedding. ‘Load shedding added costs for landlords, who had to provide backup systems, and also made for difficult trading conditions,’says Anderson. He points out that remote working hit office rentals especially. Anderson notes that ‘there was quite a lot of excitement about remote working, which some thought was the faceof the future. This was tough for the property industry as many of their clients felt they could cut back on office space’.
However, he points out that work-from-home ‘has not been the game-changer some people thought it would be. Companies have foundit difficult to manage their staff remotely and the phenomenon appears to be unwinding’.He says office vacancies in SA’s business hub, Sandton, topped 20% in 2021, at the peak of enthusiasm for remote work, but have since fallen closer to the pre-Covid norm.
The drivers of the recent run have been mostly improvements in SA conditions. ‘You have to remember that sentiment plays a huge role in the listed property sector,’ says Craig Smith, head of research and property at Anchor Stockbrokers. ‘The listed sector is very forward looking. There can be large swings based on changes in sentiment whereas the direct property market is more stable and smooth.’ Among the factors driving changes in sentiment, Smith points to the end of load shedding, the start of an interest rate cutting cycle and a lowering of perceived country risk with the formation of the Government of National Unity last year.
Growthpoint is the biggest local firm inthe segment with a market capitalisation of R41.3 billion in April 2025. Among its many properties in SA and offshore, the jewel in the crown is Cape Town’s V&A Waterfront, which has delivered extremely good performances in the commercial and retail spaces. Growthpoint owns half of the V&A, sharing ownership with state-owned asset manager Public Investment Corporation. The work, shop, stay and play precinct has recovered since Covid and load shedding, thanks partly to a resurgence in tourist numbers.
In Growthpoint’s half-year results to March 2025, the V&A Waterfront delivered R12.4 billion, 17% of the company’s operating profit. Growthpoint’s total property assets are valued at R155.2 billion. The company felt secure enough to announce an increase in its guidance for its distributable income per share from the minus-2–5% range to a positive 1–3% range.
This marks a turnaround in Growthpoint’s fortunes. The company’s performance has lagged the sector index for several years, with payouts to shareholders halving between 2019 and mid-2024. Poor performance was largely a consequence of its offshore diversification. Growthpoint has held properties in the UKand Eastern Europe via two UK entities, Globalworth Poland (2016) and Capital & Regional (2019). Debt on these holdings was disproportionately affected by macroeconomic conditions after the pandemic.
To deal with the inflation that followed the Covid pandemic, the Bank of England hiked interest rates from 0.25% (December 2021) to a high of 5.25% (July 2024). This saw a massive increase in the cost of Growthpoint associated UK debt, which required refinancing and the disposal of assets, including some in Namibia. Growthpoint finally sold Capital & Regionalto a UK based operator for about R230 billionin December 2024.
The second-biggest local firm in the JSE’s diversified Reits segment – Redefine, with a market capitalisation of R27.9 billion inApril 2025 – is another that has assets across multiple sectors and geographies. It has owned properties in SA, the UK, Poland and Australia and operates in sub-sectors ranging from traditional (retail, office and industrial) to alternative asset classes such as hotels and student accommodation. This sheer diversity or ‘sprawl’ as a commentator described it, weighed on Redefine’s share price for several years. From 2021 to 2023, the share traded at a discount to net asset value of 50%, well behind the sector’s average of 35–40% over the same period.
But Redefine has subsequently focused its activities. It now operates in only two countries, SA and Poland, where its assets are split 62/38, in line with its longer-term vision. Over five years, it sold properties worth in excessof R40 billion and shed its holdings in other listed entities. The market has rewarded the more focused company – in the first eight months of 2024, it climbed more than 30%, compared to a sector increase of 23.8%.
Smith points out that the Reit performance index covers a range of companies, some of which do not hold property in SA at all. Thisis true of Schroder European Reit plc (trading on the JSE as SERE). The company has had a secondary listing on the JSE since 2015, butis exposed to major European cities only. Shaftesbury Capital plc (SHBCAP) specialises in London West End properties and Sirius Real Estate manages business parks in Germany and the UK. None of these counters responded to SA’s 2024 surge in positive sentiment.
Burstone with a market capitalisation ofR6.3 billion has two-thirds of its investments outside SA, in eight other countries including the Netherlands, France, Germany, Italy and Poland. Many of the company’s R37 billion in assets are concentrated in the logistics sector (distribution hubs and warehouses).
However, while international exposure can deliver steady returns, if all goes well, it was the Reits with SA exposure that surged in 2024. One of the best performers was Emira, which owns 90 office and industrial properties mostly in SA (it also has a few US assets). The office properties tend to be high-end and offer potential corporate head office space. Emira’s share price gained 28% over the year to February 2025, but its earnings per share climbed 133% over the same period.
A highly regarded performer in recent years has been Attacq, which owns the Mall of Africa in Midrand and the adjacent Waterfall mixed-use precinct. The company’s share price has soared 66% over the last three years. Attacq had an eventful 2024, selling a 30% stake in Waterfall City to the Government Employees Pension Fund for R2.7 billion, which it used to settle debt. It also disposed of underperforming Eastern European and African assets and ploughed the monies back into SA investments.
Some SA Reits are geographically focused. Dipula B does not formally have a Gauteng focus, but most of the company’s 83 smaller shopping centres are in the province. Newpark, with a market capitalisation of R480 million, owns only four properties in Gauteng. But these are major assets and include the building occupied by the JSE itself. The notoriously illiquid aReit specialises in Cape Town hospitality and medical assets. SA CorporateReal Estate Fund Managers (SACORP) owns industrial, retail and residential in SA’s major urban hubs, as well as a shopping mall in Zambia. Fairvest, which has two listed vehicles differentiated by risk, FTAPROPA (conservative) and FTAPROPB (growth-oriented), is invested only in SA.
Spear owns assets only in the Western Cape. It has a market capitalisation of R3 billion and a diversified portfolio with some emphasis on office space. With an occupancy rate of more than 96% (at February 2025) it has benefited from the relative outperformance of the Western Cape province within SA.
