Listed property finally becomes defensive

Outpaced sharemarket

By Christine St Anne
Tue 27 Jul 2010

Many REITs are now much better capitalised and focused on income generation, according to a Morningstar report.

Real estate investment trusts (REITs) are now in a better position to retain their value, according to a Morningstar report.

"Many REITs are now much better capitalised and focused on income generation, which in turn has seen them hold their value better," the report said.

In particular Australian real estate securities performed better than their global counterparts over the June quarter, the report found.

The S&P/ASX300 A-REIT Accumulation Index fell 1.54 per cent for the quarter but finished the year with a substantial 20.34 per cent gain.

"Both of these results outpaced the broader sharemarket by some margin, although the sustained recovery came after 2008's massive plunge," Morningstar senior research analyst Julian Robertson said. 

APN Property for Income and APN Property for Income No 2 delivered the best results for the quarter, achieving -0.17 per cent and -0.32 per cent respectively.

Maxim Property Securities and Perennial Australian Property Wholesale were also strong performers delivering -0.75 per cent and -0.83 per cent respectively, the report found.

The Morningstar report also found that of the 33 funds in the Australian real estate category 10 managed to outperform Vanguard's Australian Property Securities Index Fund over three months and eight for the year to 30 June 2010.

Zurich Investments Australian Property Securities and EQT SGH Wholesale Property Income were the worst performers over the June quarter, with returns of -3.21 per cent and -3.15 per cent respectively, the report said

However, both funds were among the top five over the past 12 months.

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