By guest contributor Ebony Chapman, Atchison Consultants
Australian real estate investment trusts (AREITs), as represented by the S&P/ASX 200 REITs Index, returned -4.9% outperforming the S&P/ASX 200 return of -7.7% over the month.
Over the 12 months to February 2020, AREITs posted a total return of 11.8% (3.2% higher than the S&P/ASX 200 return of 8.6%).
Sector Performance
Table 1 below shows the performance of AREITs for various periods ending 29 February 2020.
The medium-to-long term performance of AREITs has been relatively strong. Over the 3 years and 5 years to the end of February, the sector produced total returns of 9.9% and 8.8% per annum respectively.
Sector returns in February were led by Industrial AREITs with 0.5%, followed by Office AREITs with -4.3%, Diversified AREITs with -5.5% and Retail AREITs with -8.0%. The declines are consistent with recent market moves due to coronavirus, those sectors with higher potential impact due to the virus (i.e. Retail) seeing steeper declines. This idea is explored in the Market Review.
Table 2 below shows the income performance of AREITs for various periods ending 29 February 2020.
The income component of the total return was 2.0% for the 12-month period to February 2020. The annual volatility of income returns was 2.1%, which is low when compared with other asset classes.