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Blog : 18 October 2016 (Coronation now owns more than 60% of Ascension Properties )
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We have written in the past about Coronation possibly become a victim of their own success. As their reputation grows and clever ad campaigns brings in customers it brings it's own set of problems.
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Coronation slowly swallowing the property shares on the JSE
Ascension properties (AIA) announced today that Coronation now owns more than 60% of their shares via funds (such as unit trusts and pension funds) and money they manage on behalf of clients.
In Ascension's last annual report (for August 2015, that was posted to shareholders end of February 2016), they showed that Coronation owned just over 55% of AIA's shares. So since August 2015 to now, Coronation has pushed up it's holding by another 5%. Now the question is and we have asked this before, are they seeing value in AIA or are they just investing money for the sake of investing as their fund's mandates state they need to invest x-percentage of funds received in listed shares and into specific industries etc.
So for example. Investor A investing into fund B. Fund B is mandated to invest 100% of funds received in listed properties. Now Coronation is obliged to invest in listed properties. They then decide where and in which property funds to invest. What happens if listed property shares have gone up strongly and is now overvalued? Coronation cant help but buy at high valuations as they are forced to keep investing in these shares by the mandate for the fund.
So for example. Investor A investing into fund B. Fund B is mandated to invest 100% of funds received in listed properties. Now Coronation is obliged to invest in listed properties. They then decide where and in which property funds to invest. What happens if listed property shares have gone up strongly and is now overvalued? Coronation cant help but buy at high valuations as they are forced to keep investing in these shares by the mandate for the fund.
We questioned why Coronation would hold a significant stake in niche property REIT, Stor-Age (SSS) as SSS is fully valued already. Read SSS valuation here. Now news comes out that their holding in another property REIT has increased. Is Coronation seeing value in the property sector or is their Property Equity Fund just receiving a lot of money to invest, forcing them to keep adding to their property holdings?
We dont have the answer for that but we promise to keep a close eye on developments in the property sector and announcements made by such companies and in particular where Coronation is involved.
We dont have the answer for that but we promise to keep a close eye on developments in the property sector and announcements made by such companies and in particular where Coronation is involved.