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Highlights of his interview appear below. You can also listen to the full podcast above or download it from iono, Spotify or Apple Podcasts. “Really the only little dark cloud that’s a real issue at the moment – or remains a bit of an issue – is that higher interest rates are still having an impact on the income statements of the Reits.
“And then we also had discussions, because one of the key challenges in in our sector is obviously municipalities and, let’s say, government policy, etc.
“Now typically, you could find in some of the developed markets that their exposure to real estate will be as high as 10%.
“But as this goes into the base, in other words, when you’re at 45%, then you sort of have to start investing back into South Africa again, in the ordinary course 60% of your capital, and some of that will find its way into real estate. And increasingly, if the real estate industry can demonstrate growth in earnings and potentially good returns, then I think we’ll start seeing a larger lion’s share of that capital, and that will ultimately help to drive share prices.
“So similarly to how they at the moment are having to manage with higher interest rates – and that’s obviously having a negative impact on the income statements – a reduction in interest rates will have a positive impact on their income statements, which means bigger distributions to investors.”A topical issue whenever I speak to a Reit CEO – and the big question at the conference also – is around Reits trading at a discount to net asset values.