By guest contributor Jeremy Jiang, analyst, Atchison Consultants
Australian real estate investment trusts (AREITs), as represented by the S&P/ASX 200 REITs Index, returned -3.1% in October 2018, a significant outperformance of the S&P/ASX 200, which returned -6.1% over the month.
Over the 12 months to October 2018, AREITs posted a total return of 7.3% versus 3.0% for the broader Australian share market. Merger and acquisition (“M&A”), buyback and REIT transaction activity in AREITs picked up.
Sector Performance
Table 1 below shows the performance of the AREIT sector for various periods ending 31 October 2018.
Table 1
The medium to long-term performance of AREITs continues to be relatively strong. Over 5 years ended 31 October 2018, the sector produced a total return of 11.1% per annum. From a shorter-term perspective, total returns for periods of 3 months and 6 months were a respectable -2.2% and 4.0% respectively.
Investors turned to AREITs as a safe haven in a month of increased volatility in world equity markets. Over the previous 12 months, AREITs have been a top performer globally, returning 7.3%, followed by US REITs (2.1%). European REITs returned -2.1% while REITs in the Asia-Pacific region had a really awful return of -17.7%.