Contributor: Chris Owens, Analyst, Atchison Consultants
Australian real estate investment trusts (AREITs), as represented by the S&P/ASX 200 REITs Index, returned -1.5% in the month ending 30 September 2020. The AREIT index has outperformed the S&P/ASX 200 return of -3.7% over the month.
Over the 12 months to August 2020, AREITs posted a total return of -16.6%, 6.4% lower than the S&P/ASX 200 return of -10.2%. AREITs have not yet recovered from the 35.5% fall in March.
Sector Performance
Table 1 below shows the performance of AREITs for various periods ending 30 September 2020.
Restrictions arising from the pandemic are having a substantial impact on the performance of the AREITs. Over the 3 years and 5 years to the end of September, the sector produced total returns of 3.7% and 5.6% per annum respectively.
Sector returns in September were led by Diversified AREITs with 0.4%, followed by Office AREITs with 0.1%, Industrial AREITs with -1.8% and Retail AREITs with -3.4%. Low returns from Office AREITs reflected concerns over continued work from home practices. Retail AREITs have experienced a decline, as Victoria continued extreme lockdown restrictions.
Table 2 below shows the income performance of AREITs for various periods ending 30 September 2020.
The income component of the total return was 3.7% for the 12-month period to September 2020. Annual volatility of income returns was 1.9%, which is low when compared with other asset classes.