I personally have a problem with listed property stocks that generate revenue from other listed property stocks. To me, the beauty of listed property is the annuity income. They are not shoot the lights out capital growth stocks, but rather stable, low risk quality investments. Now a stock like Fortess, 40% of its asset value is based on fair value adjustments of its investments into Nepi, Resllient (which in turn invests in Nepi!), ROC, etc. If you look at their reported income - R700m in rentals - R1bn in fair value adjustments. Why do I need to buy Fortress, just so that I can own Nepi? (I own Nepi - a great performer!). Not saying its a bad stock - but it doesn't conform to my view on how to invest in listed property. I own Hyprop, Attacq, Nepi and Redefine (and Arrow - thanks to a Redefine unbundling). Redefine has been a bit of a dog - but Arrow has done OK. Attacq is on the move of late and Hyprop is doing great. Granted, Hyprop owns bits of Attacq, but the difference is that Hyprop can buy out Attacq in its entirety if needed - Fortress can't do the same with Nepi!
