- The S&P/ASX 200 A-REIT index had a solid month in February returning +1.8%, though this number does not reveal the dispersion of returns among the Listed Property Trusts, with the developers dragging up the overall index’s return.
- The Atlas High Income Property Fund fell -2% in February, reflecting our conservative positioning towards higher yielding rent collectors with recurring income and away from Trusts relying on development profits.
- Historically, the Trusts with development earnings both see earnings growth and a multiple expansion towards the end of a property boom. As developers such as Goodman are trading on close to 25 times forward earnings, the market is effectively assuming that this source of profits will both grow and continue indefinitely. We are encouraged that the Fund is utilising the right strategy after seeing articles praising aggressive approaches to property management such as “Listed real estate is no longer boring”. We saw similar articles in 2006 and 2007, praising Goodman and Centro and their new age approach to property.
Go to Monthly Newsletters for a more detailed discussion of the listed property market and the fund’s strategy going into 2019.