Australian real estate investment trusts (AREITs), as represented by the S&P/ASX 200 REITs Index, returned 1.8% in February, thus underperforming the S&P/ASX 200 which returned 6.0% over the month.
Over the 12 months to February 2019, AREITs posted a significant total return of 18.9%, which was 11.8% higher than the S&P/ASX 200 (7.1%).
February was dominated by the reporting season. One of the key messages was that “quality matters”. Across the sector there were numerous examples of high-quality AREITs delivering superior performances over lower-quality competitors. The most notable example of this trend was between Stockland (SGP, -7.4%) and Mirvac (MGR, 7.1%). The share price performance for AREITs highly correlated with earnings revisions.
Sector Performance
Table 1 below shows the performance of the AREIT sector for various periods ending 28 February 2019.
Table 1
The medium to long term performance of AREITs continues to be relatively strong. Over 3 years and 5 years ended 28 February 2019, the sector produced total returns of 8.6% and 13.0% per annum respectively.
Sector returns for February 2019 were diverse. Industrial AREITs was the best performer with an outstanding return of 9.3%, followed by Office AREITs which returned 4.5%, Diversified AREITs with 1.0% and Retail AREITs with -2.0%.