October Monthly Newsletter

  • October saw a sharp rebound from the falls seen in September, based on the view that the central bank’s tightening of interest rates was nearing its peak. Over the month, many companies provided quarterly trading updates that showed solid leasing activity, robust tenant sales and minimal changes to vacancies. Besides improving macroeconomic sentiment, favourable trading updates saw investors buying property stocks.
  • The Atlas High Income Property Fund gained +9.6%, as several key holdings saw significant recoveries in their share prices. Arena REIT (+18%) rallied the Federal Budget provided for increased childcare subsidies and SCA Property (+15.7%) on the “new” view that food inflation and rising mortgage payments might be beneficial for supermarket landlords due to higher sales. These two companies were sold down heavily in September, despite reporting solid profits and a positive outlook for 2023.
  • The extreme market volatility over the past six months is very unusual and a result of a normalising of interest rates and, for many investors, their first experience with inflation. While exasperating, the Fund is populated with companies positioned to navigate changing market conditions with long-term fixed-rate debt and revenues tied to inflation.

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