- The S&P/ASX 200 A-REIT index had a strong month in May gaining +2.4% powered by the developers which posted strong gains after a surprise coalition victory. With trusts such as Goodman and Charter Hall now being valued at over 25 times forward earnings and distribution yields between 2-3%, the market is pricing these trusts as if we were in the early days of a property boom, rather than in one that is unwinding.
- The Atlas High Income Property Fund declined by -0.7% in May due to weakness in the share prices of the consumer staples landlords, as well as last month’s star performer Unibal-Rodamco-Westfield trading downwards in line with global equity markets.
- We remain very frustrated by the Fund’s performance relative to the property index that is being increasingly dominated by developers and fund managers, rather than traditional rent-collecting property trusts. Atlas strongly believe that a portfolio populated with trusts that offer investors recurring earnings from rental income, will outperform through the cycle and allow us to deliver a more stable stream of distributions to the Fund’s investors.
Go to Monthly Newsletters for a more detailed discussion of the listed property market and the fund’s strategy going into 2019.