By guest contributor Ken Atchison, Principal, Atchison Consultants
Australian real estate investment trusts (AREITs), as represented by the S&P/ASX 200 REITs Index, returned -4.4%, underperforming the S&P/ASX 200 return of -2.0% over the month.
Over the 12 months to December 2019, AREITs posted a total return of 19.4% (4.0% lower than the S&P/ASX 200 return of 23.4%).
Sector Performance
Table 1 below shows the performance of AREITs for various periods ending 31 December 2019.
The medium-to-long-term performance of AREITs has been relatively strong. Over the 3 years and 5 years to the end of December 2019, the sector produced total returns of 9.1% and 10.9% per annum respectively.
Sector returns in December were disappointing. Office AREITs had the least negative result, returning -2.5%, followed by Retail AREITs with -3.0%, Diversified AREITs with -4.1%. Industrial AREITs fell 8.5% over the month, due to Goodman Group’s (GMG) removal from the FTSE EPRA NAREIT global property index.
Table 2 below shows the income performance of AREITs for various periods ending 31 December 2019.
The income component of the total return was 4.6% for the 12-month period to December 2019. The annual volatility of income returns was 2.1%, which is low when compared with other asset classes.