By guest contributor Ebony Chapman, Atchison Consultants
Australian real estate investment trusts (AREITs), as represented by the S&P/ASX 200 A-REIT Index, returned -35.1%. This is the worst monthly return of the index since inception in January 1977, followed by October 2008 (-25.2%) and October 1987 (-23.2%). The AREIT index underperformed the S&P/ASX 200 return of -20.7% over the month. This was the second-worst monthly return in the combined history of the ASX 200 and All Ordinaries indices, the first being October 1987 (-42.1%). The record declines are attributed to the heightening of coronavirus fears, as markets price in current and potential impacts of the pandemic on the global economy.
Over the 12 months to March 2020, AREITs posted a total return of -31.7% (17.3% lower than the S&P/ASX 200 return of -14.4%).
Sector Performance
Table 1 below shows the performance of AREITs for various periods ending 31 March 2020.
The coronavirus has had a substantial impact on the medium-to-long term performance of the AREIT sector. Over the 3 years and 5 years to the end of March, the sector produced total returns of -5.1% and 0.2% per annum respectively.
Sector returns in March were led by Industrial AREITs with -19.7%, followed by Office AREITs with -27.4%, Diversified AREITs with -38.0% and Retail AREITs with -46.3%. The declines were consistent with recent market moves due to the coronavirus, those sectors with higher potential impact due to the virus (i.e. Retail) seeing steeper declines.
Table 2 below shows the income performance of AREITs for various periods ending 31 March 2020.
