By Chris Owens, Analyst, Atchison Consultants
Australian real estate investment trusts (AREITs), as represented by the S&P/ASX 200 AREIT Index, returned 5.5% in the month ending 30 June 2021. The AREIT index outperformed the S&P/ASX 200 return of 2.3% over the month.
Over the 12 months to June 2021, AREITs posted a total return of 33.2%, outperforming the S&P/ASX 200 return of 27.8%. Recovery from the depths of falls in 2020 prompted by the pandemic is reflected in this performance.
Sector Performance
Table 1 below shows the performance of AREITs for various periods ending 30 June 2021.
Over the 3 years and 5 years to the end of June, the sector produced total returns of 7.7% and 5.8% per annum respectively.
Sector returns in June were led by Industrial AREITs with 9.4% and Diversified AREITs with 5.6%, followed by Office AREITs with 3.8% and Retail AREITs with 2.6%. Returns were strong across all sectors.
Table 2 below shows the income performance of AREITs for various periods ending 30 June 2021.
The income component of the total return was 3.7% for the 12-month period to June 2021. Annual volatility of income returns was 1.8%, which is low when compared with other asset classes.
AREITs were trading at an earnings yield of approximately 5.6%, significantly higher than yields of both cash and Commonwealth Government bonds. The spread of the earnings yield over the 10-year government bond yield remained at 4.3%.