May Monthly Newsletter

  • May proved to be a very volatile month dominated by macroeconomic news predominantly around US lawmakers’ intentions for the US debt ceiling, which saw global markets fall between 0% and -5%, with the ASX declining by -2.5%. Domestically, the RBA surprised the market by increasing the cash rate by 0.25% to 3.85%, representing the 11th increase in the cash rate since May 2022.
  • The Atlas High Income Property Fund slipped -1.1% in May, driven primarily by macroeconomic factors rather than stock-specific news. Atlas looks forward to the upcoming August profit season, allowing management teams to demonstrate how they have handled the high inflationary environment over the last year. With the bulk of the companies owned by the Fund declaring distributions in late June, this will guide us in the next few weeks on how the companies are progressing in the environment.
  • The biggest factor impacting the listed property market is the perception that company valuations of their assets are inaccurate and do not reflect changing market conditions. While this may be true for office towers and large shopping centres, it is not valid for companies the Fund holds, which have valuations backed up by actual transactions in the direct property market. In May, Woolworths and Coles sold a $161M portfolio of small shopping centres at a capitalisation rate similar to that used to value Region and Charter Hall Retail’s assets.

Go to Monthly Newsletters for a more detailed discussion of the listed property market and the fund’s strategy going into 2023.