By Chris Owens, Analyst, Atchison Consultants
Australian real estate investment trusts (AREITs), as represented by the S&P/ASX 200 AREIT Index, returned +2.9% in the month ending 30 April 2021. The AREIT index underperformed the S&P/ASX 200 return of -0.6% over the month.
Over the 12 months to April 2021, AREITs posted a total return of +30.9%, performing in line with the S&P/ASX 200. Recovery from the depths of falls prompted by the pandemic is reflected in this performance.
Sector Performance
Table 1 below shows the performance of AREITs for various periods ending 30 April 2021.
Over the 3 years and 5 years to the end of April, the sector produced total returns of 7.1% and 5.6% per annum respectively.
Sector returns in April were led by Diversified AREITs with +5.6%, followed by Office AREITs with +4.6% and Industrial AREITs with +4.4%. Retail AREITs fell 2.6%. Returns were strong across all sectors, except retail.
Table 2 below shows the income performance of AREITs for various periods ending 30 April 2021.
The income component of the total return was 3.6% for the 12-month period to April 2021. Annual volatility of income returns was 1.6%, which is low when compared with other asset classes.
AREITs were trading at an earnings yield of approximately 5.9%, 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 4.4%.