SA REITs defy equity sell-off as income growth surges
South African listed property strengthened in September despite rising interest rates and a sharp equity sell-off, with distribution growth reaching 11.09%.
- SA REITs gained 1.6% in September while the All Share Index fell 5.8%, outperforming equities by more than seven percentage points.
- Rolling 12-month distribution growth climbed to 11.09%, its strongest underlying reading since 2017 and the sixth consecutive quarter above inflation.
- Dipula B, Attacq, Hyprop and Fortress B led September’s gains as R16.2 billion of SA REIT units changed hands.
Listed property shows resilience in September
South African listed property delivered a notable show of resilience in September, gaining ground in a month characterised by falling equities, rising interest rates and increasing uncertainty over the outlook for 2027.
According to the latest SA REIT Association Chart Book, South African REITs returned 1.6% during September, compared with a 5.8% decline in the All Share Index and a flat 0.0% return from the All Bond Index.
That moved SA REITs back ahead of both major asset classes for 2026, with the sector now 4.0% higher year to date, compared with 3.5% for bonds and -3.2% for equities.
The third quarter was nevertheless more difficult, with SA REITs returning -2.1% over the three months. But September’s performance matters because of how the recovery occurred.
The sector advanced while interest rates were moving higher both in South Africa and internationally, while rolling 12-month distribution growth accelerated from 10.58% to 11.09%.
Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments and compiler of the Chart Book, says September effectively reversed August’s weakness.
“The sector rose while equities fell close to 6%. It did so on the heaviest trading volumes since March, so this was not a thin-market move.”
With a strong results season behind it, Anderson says listed property demonstrated defensive characteristics at precisely the point investors were seeking them.
A month when the sector held its ground
September’s 1.6% return meant SA REITs outperformed the broader equity market by more than seven percentage points. Importantly, the move was supported by significant trading activity.
Some R16.2 billion of SA REIT units changed hands during September, the sector’s heaviest trading month since March and well ahead of the R9.7 billion recorded in August.
Performance was also relatively broad, with 12 of the 22 counters included in the Chart Book finishing September higher.
The month’s leading performers were:
- Dipula B: +8.2%
- Attacq: +7.8%
- Hyprop: +6.8%
- Fortress B: +5.9%
- Vukile: +4.3%
- Emira: +3.7%
Several counters that lost ground during August, including Vukile, Fortress B and Resilient, also recovered during September.
Looking across 2026, the strongest year-to-date performances came from Oasis Crescent (+36.4%), Octodec (+23.6%) and Heriot (+20.2%), followed by Fairvest A (+14.9%), Attacq (+13.0%) and Spear (+12.0%). Twenty-one of the 22 counters are positive over 12 months.
Income growth at its strongest in almost a decade
Perhaps the most important number in the September Chart Book is not the month’s 1.6% total return. It is 11.09%. Rolling 12-month distribution growth increased from 10.58% three months earlier to 11.09% at the end of September.
That represents the sixth consecutive quarter in which distribution growth has exceeded inflation and the strongest underlying reading since 2017, excluding the distorted pandemic comparatives of 2021 and 2022.
With headline inflation at 4.4%, the real spread between distribution growth and inflation now exceeds six percentage points.
Anderson cautions, however, that investors shouldn’t simply extrapolate that growth into 2027. “Distribution growth of 11.09% is the strongest the sector has recorded in almost a decade outside the pandemic base effect.”
But he believes it may be close to its peak, with 2027 company guidance generally below the growth delivered during 2026 and higher interest rates beginning to work their way into earnings.
A results season confirming a strong 2026
September also brought much of the sector’s full-year reporting, providing investors with a clearer view of the operational performance beneath the share prices.
- Fortress increased its dividend by 10.1% to 178.80 cents, while distributable earnings rose 14.2%. Like-for-like NOI increased 6.8%, NAV rose 9.2%, and its LTV improved substantially from 39.1% to 34.0%.
- Hyprop grew DIPS by 11.7% and increased its dividend by 14.4% to 351.9 cents. South African retail reversions were positive at 8.7%, while its LTV improved to 28.5%. Guidance for 2027 stands at 7% to 9%.
- Attacq delivered normalised DIPS growth of 15.5% and increased its dividend 17.2% to 102 cents. Occupancy improved from 91.6% to 94.9%, while rental reversions swung from -9.1% to positive 3.4%.
- Vukile expects South African like-for-like NOI growth of 8.5%, while vacancies remain low at 1.9%. Its Iberian business, Castellana, achieved rental uplifts of 6.8%. Vukile retained guidance of 10% to 12% dividend growth, making it one of the relatively few REITs still forecasting double-digit dividend growth into 2027.
- Heriot increased its dividend by 16.7%; SA Corporate grew its interim dividend 7.0%; and Growthpoint increased its dividend by 7.4% while strengthening its balance sheet through R4.9 billion of disposals.
- Burstone, meanwhile, announced arguably the month’s most significant structural transaction, transferring R5.4 billion of South African retail and industrial properties into its new funds management platform with Nedbank Property Partners while retaining a 50% interest and the management mandates.
- Fairvest expects dividend growth towards the top of its 11% to 13% guidance range, while Emira continued recycling capital. The Chart Book notes that office remains the laggard across the sector.
A growing web of cross-holdings
Another important trend is emerging below the headline performance numbers: REITs are increasingly buying into one another. Among the mid-cap counters:
- Emira owns 23.9% of Octodec
- Emira owns 6.9% of SA Corporate
- Fairvest owns 20.1% of Dipula
- Heriot owns 21.7% of Texton
SA REIT Association CEO Joanne Solomon believes this points towards a sector actively reshaping itself.
“Balance sheets are stronger, payout ratios are more conservative and capital is being recycled with real discipline.”
She says September demonstrated both the sector’s defensive qualities during a difficult equity market and the increasing strategic activity occurring among mid-cap REITs.
The rate cycle turns at home and abroad
The resilience comes with an important caveat: the interest-rate environment has become less supportive.
The South African Reserve Bank raised the repo rate by 25 basis points to 7.25% on 23 September, as headline inflation increased to 4.4%.
Internationally, the Chart Book also points to developed-market policy rates rising for the first time since 2023 and long-dated sovereign yields reaching their highest levels in almost two decades.
Solomon argues that SA REITs enter this cycle in a stronger position than before. “Loan-to-value ratios are lower, payout ratios are more conservative and a great deal of debt has been refinanced on better terms over the past two years.”
That doesn’t make listed property immune to higher rates, she cautions, but it gives the sector a substantially stronger starting position.
What investors should watch next
The September numbers provide a strong finish to the results season, but 2027 is unlikely to reproduce 2026’s double-digit income growth across the sector.
Anderson expects distribution growth to moderate towards the mid-to-high single digits, with some existing guidance issued before September’s latest rate increase.
Valuation also deserves attention. SA REITs’ forward yield eased to 7.03%, while the long bond yield rose to 8.92%, widening the differential to -188 basis points compared with a long-run average of -14 basis points.
That makes delivery on earnings and distribution guidance increasingly important.
Anderson says previous distribution-growth peaks in 2008 and 2016 show that tightening cycles ultimately test the sector. But today’s REITs enter that test with stronger balance sheets, lower payout ratios and greater capacity to withstand higher short-term rates.
SA REIT September snapshot
- September return: +1.6%
- All Share Index: -5.8%
- All Bond Index: 0.0%
- SA REIT year-to-date: +4.0%
- Distribution growth: 11.09%
- September trading: R16.2 billion
- Top September performer: Dipula B +8.2%
- Repo rate: 7.25%
The bottom line
September demonstrated why listed property deserves renewed investor attention.
SA REITs managed to produce positive returns while equities sold off, grow distributions substantially ahead of inflation and strengthen balance sheets, even as the interest-rate cycle became more challenging. The next phase will be harder.
The investment case for 2027 will increasingly depend on whether REITs can translate stronger portfolios, disciplined capital recycling and improved balance sheets into sustainable income growth after the extraordinary 11.09% distribution growth of 2026 begins to normalise.
For investors, that makes the next question less about whether SA REITs have recovered and more about which REITs can keep delivering when the tailwinds become headwinds.
For a detailed analysis of sector performance, company results, valuation metrics and market trends, download the full SA REIT Association Chart Book for September 2026.
