After a strong performance in April, the South African real estate investment trust (Reit) sector experienced a modest pullback in June, declining by 1%, trailing both equities (+2.4%) and bonds (+2.3%) for the month, industry organisation the SA Reit Association’s monthly Chart Book for June indicates.

However, some analysts have cautioned against interpreting the decline as a reversal in fundamentals, pointing instead to profit-taking in larger counters following an extended period of outperformance, the organisation explains.

“The June dip appears more technical than structural. Many of the more liquid stocks have delivered stellar returns over the past 18 months, so some rotation was inevitable, particularly in a month where global sentiment was otherwise risk-on,” Merchant West Investments listed property head and portfolio manager Ian Anderson says.

He is also the compiler of the Chart Books.

Hyprop, Resilient and Redefine saw declines of just over 2%, while Growthpoint and Vukile edged slightly lower.

Accelerate, however, delivered a standout performance, with the company gaining 17.8% in June following the announcement of a R100-million rights offer aimed at enhancing Fourways Mall and strengthening its working capital position.

Despite softer price action, operational performance remained strong, the Chart Book reveals.

Fairvest, Stor-Age and Vukile’s June results showed progress, with all three projecting mid-to-high single-digit growth in distributable income through the 2025 and 2026 financial years.

“These are healthy forecasts and suggest the dividend growth story has further to run. In fact, we are starting to see early signs of renewed access to equity capital, as evidenced by Spear’s successful R749-million raise,” Anderson avers.

Fortress’s resumption of dividends also contributed significantly to year-to-date growth.

Looking ahead, the outlook for lower interest rates remains supportive, with a strong rand and lower oil prices bolstering expectations for a rate cut by the South African Reserve Bank, the organisation posits.

“Rate cuts would further reduce funding costs, underpin valuations and support income growth into 2026 and beyond,” Anderson highlights.

The SA Reit Association is of the view that sector valuations remain attractive, and dividend momentum continues to anchor investor confidence in the medium term.

It says the return to high single-digit dividend growth for the sector underpins current valuations, and if these growth rates are maintained into 2026 and 2027, could provide considerable capital upside for investors.

“Improving property fundamentals, lower official interest rates and access to capital at reduced costs all support stronger distributable income growth in the medium term,” Anderson says.