He says the impact of interest rates on the economy and the effect on demand for space by tenants has been a focus of potential investors, mainly larger asset managers and some hedge funds.
"Now last week's interest rate increase of 50 basis points – the ninth such increase in a row and the fourth in 2007 – has prompted further inquiries with a view to establishing which companies have less interest rate volatility and whose earnings are based on a core property portfolio."
Ewin, who is also CEO of SA Corporate Real Estate Fund, the country's third largest listed fund, says inquiries have also come from potential foreign investors. These, he says, are a further reflection of the keen interest in the sector, particularly in the United States where there is significant domestic money looking for offshore investment opportunities.
"They also reflect appreciation of the changing environment in which SA listed real estate companies find themselves and that companies with lower gearing will be far less impacted by interest rate changes.
While many companies have had earnings growth boosted by fixes expiring in a cheaper interest rate environment, the opposite will be true as those fixes unwind in the near term. As opposed to earnings being boosted by balance sheet debt becoming cheaper, they may be negatively impacted by fixes expiring and debt becoming more expensive."
Ewin says the average debt percentage in the listed real estate sector, according to research by Catalyst Property Asset Managers, is 27,1%.
"The debt percentages range from a high of 75% down to below 11%. In the case of SA Corporate, funding of 2007 acquisitions through equity instead of debt resulted in a low gearing of 10,6%."
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