By guest contributor Ebony Chapman, Atchison Consultants
Australian real estate investment trusts (AREITs), as represented by the S&P/ASX 200 REITs Index, returned 13.7% in the month ending 30 April 2020. The AREIT index outperformed the S&P/ASX 200 return of 8.8% over the month. These returns represent a modest recovery after the record declines in the market due to the coronavirus restrictions in March.
Over the 12 months to April 2020, AREITs posted a total return of -20.3% (11.2% lower than the S&P/ASX 200 return of -9.1%).
Sector Performance
Table 1 below shows the performance of AREITs for various periods ending 30 April 2020.

The restrictions arising from the pandemic have 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 April, the sector produced total returns of -1.8% and 3.0% per annum respectively.
Sector returns in April were led by Retail AREITs with 29.6%, followed by Industrial AREITs with 8.4%, Office AREITs with 1.7% and Diversified AREITs with -11.4%. These returns reflect the recovery after the steep declines in March. Retail AREITs led the other sectors this month after declining -46.3% in March.
Table 2 below shows the income performance of AREITs for various periods ending 30 April 2020.
The income component of the total return was 4.5% for the 12-month period to April 2020. The annual volatility of income returns was 2.1%, which is low when compared with other asset classes.
The AREIT sector was trading at an earnings yield of approximately 8.1%, which was higher than yields of both cash and Commonwealth Government bonds at the time. The premium to Australian 10-year government bonds was 7.24%.