September, 2023
The Fund returned ‐9.16% during September, underperforming the S&P/ASX 300 AREIT Index by -0.50%.
The top monthly contributor to performance was the Fund’s underweight position in Cromwell Property Group. Cromwell is seeking to address its elevated gearing position by rebasing its dividend and divesting a portfolio of high‐yielding Polish retail assets, however, transaction execution remains challenging.
The Fund’s overweight position in Stockland also contributed to monthly performance. The Group is positively leveraged to a recovery in housing markets, whereby national dwelling prices rose for the sixth consecutive month. Stockland is also defensively positioned with a strong balance sheet to withstand rising interest rates.
The main detractor from monthly performance was the Fund’s overweight position in Rural Funds Group. The Group is currently undertaking productivity upgrades across cattle and cropping properties, whilst also pursuing a major macadamia development program. Capital intensive business models underperformed during September, with market sentiment shifting to a ‘higher for longer’ interest rate outlook.
The Fund’s underweight position in Centuria Industrial REIT also detracted from monthly performance. The Group is benefiting from strong operational performance and rental reversion in its under‐rented investment portfolio. Despite resilient industrial fundamentals, underlying earnings growth is elusive due to a long lease profile and an inability to catch the cycle.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-2-1.pdfAugust, 2023
The Fund returned +4.00% during August, outperforming the S&P/ASX 300 AREIT Index by 1.82%.
The top monthly contributor to performance was the Fund’s overweight position in Goodman Group. The industrial fund manager outperformed following the release of its FY23 earnings result, in which they announced a significant data centre development opportunity. We continue to be attracted to Goodman Group for its sustainable earnings growth, underpinned by strong underlying fundamentals in the industrial sector and a sizeable development pipeline.
The Fund’s underweight position in Charter Hall Long WALE REIT also contributed to monthly performance, which underperformed after forward earnings guidance fell short of market expectations. The Fund maintains an underweight position in the REIT due to its stretched balance sheet position, tight capitalisation rates, and continued headwinds from rising cost of debt.
The largest detractor from monthly performance was the Fund’s overweight position in Abacus Property Group. Abacus underperformed post the de‐staple of its self‐ storage assets into a separate REIT. We believe the Group’s core commercial portfolio is trading significantly below intrinsic value with a recapitalised balance sheet.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-1-2.pdfJuly, 2023
The Fund returned +4.06% during July, outperforming the S&P/ASX 300 AREIT Index by 0.17%.
The top monthly contributor to performance was the Fund’s overweight position in Rural Funds Group. The Group is currently pursuing a major macadamia development program, as well as deploying capital across cattle and cropping productivity upgrades. We continue to be attracted to the uncorrelated cash flows with strong and appreciating asset backing.
The Fund’s overweight position in Lifestyle Communities also contributed to monthly performance. Lifestyle Communities is significantly scaling its production rate with the launch of seven new projects, underpinned by strong demographic tailwinds. The manufactured housing estate developer outperformed following the RBA’s decision to pause its rate hiking cycle.
The main detractor from monthly performance was the Fund’s overweight position in Abacus Property Group. The self‐storage sector exhibited softening fundamentals, with lower occupancy levels due to a weaker consumer environment. Abacus is in the process of demerging its commercial and storage portfolios to unlock securityholder value and enhance the strategic outlook of the standalone storage business.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-24.pdfJune, 2023
The Fund returned +0.69% during June, outperforming the S&P/ASX 300 AREIT Index by 0.78%.
The top monthly contributor to performance was the Fund’s overweight position in HMC Capital Limited. The fund manager announced a $400m equity commitment within its Last Mile Logistics Fund, marking the Group’s first significant institutional equity contribution. The Group also announced its Unlisted Healthcare & Life Sciences Fund is on track for its first close in September.
The Fund’s underweight position in Region Group also contributed to monthly performance. The convenience and discretionary retail asset owner underperformed in response to falling consumer confidence in a rising interest rate environment.
The main detractor from monthly performance was the Fund’s overweight position in National Storage REIT. The storage asset owner underperformed after providing a market update that disclosed a fall in occupancy, impacted by a weaker consumer environment. The Fund’s overweight position in Ingenia Communities Group also detracted from monthly performance after flagging increased buyer caution is impacting residential activity levels and sales rates.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-23.pdfMay, 2023
The Fund returned -2.28% during May, underperforming the S&P/ASX 300 AREIT Accumulation Index return of -1.81%.
The Fund’s overweight position in HMC Capital Limited was the strongest contributor to monthly performance. The fund manager outperformed following the acquisition of a $1.2bn Healthscope hospital portfolio and the concurrent launch of its unlisted healthcare strategy. The deal increases the Group’s total assets under management to $7.5bn and demonstrates an ability to execute large complex transactions in challenging capital market conditions.
The Fund’s overweight position in Goodman Group also contributed to performance after the Group raised earnings guidance during the month. Goodman Group remains a key overweight holding with exposure to world class industrial assets and significant balance sheet capacity to execute on its sizeable development pipeline.
Detractors to performance included the Fund’s overweight position in Lifestyle Communities. The manufactured housing estate developer underperformed after lowering its FY23 home settlement forecasts. The Group’s medium term settlement targets were retained, suggesting the timing issue is not reflective of production constraints or lower buyer demand. Lifestyle is significantly scaling its production rate with the launch of seven new projects, underpinned by strong demographic tailwinds.
The Fund’s overweight position in Rural Funds Group also detracted from performance. The Group is currently deploying capital across cattle and cropping productivity upgrades, whilst also pursuing a major macadamia development program. The market remains cautious towards capital expenditure intensive business models; however, we are comfortable that the Group has sufficient liquidity to execute its growth strategy. We continue to be attracted to the uncorrelated cash flows with strong and appreciating asset backing.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-22.pdfApril, 2023
The Fund returned 5.36% during April, outperforming the S&P/ASX 300 AREIT Accumulation Index return of 5.16%. The main contributors to relative performance were the Fund’s overweight residential exposures, which posted strong monthly returns as national house prices stabilised following the first RBA pause after ten consecutive interest rate hikes.
The Fund’s overweight position in Mirvac was the strongest contributor to monthly performance, which reported its Q3 update and rebased FY23 earnings by deferring a portion of residential settlements and capital profit recognition into the following financial year. Mirvac also announced progress across several strategic initiatives; introducing capital partners across its entire build-to-rent pipeline and key commercial developments, whilst also entering due diligence across two major office assets to complete its $1.3bn divestment program. The Fund’s overweight position in Stockland also contributed to performance, which similarly reported its Q3 update and demonstrated positive momentum across all business divisions. Its residential segment reported a large rebound in buyer enquiry levels, back to pre-pandemic levels, whilst its commercial trust reported strong industrial leasing and retail sales outcomes.
Detractors to performance included the Fund’s overweight position in Rural Funds Group, which is currently ramping up its capital expenditure across cattle and cropping productivity upgrades, whilst also pursuing a major macadamia development program. The market continues to take a cautious view towards capital-hungry business models. However, we are comfortable that the Group has sufficient liquidity to execute its growth strategy, and we remain attracted to the uncorrelated cash flows with strong and appreciating asset backing. The Fund’s overweight position in Goodman Group also detracted from performance, which lagged the Index with minimal news flow. We expect the Group to report a strong trading update in May, benefiting from strong industrial market tailwinds across its global platform.
File:March, 2023
The Fund declined by ‐6.59% during March, outperforming the S&P/ASX 300 AREIT Index by 0.25%.
During the month, the top contributor to performance was the Fund’s underweight position in GPT Group, which retracted ‐10% as the market assessed tightening credit conditions and the impact to office valuations. These similar concerns weighed on the performance of listed fund managers, whereby interest rate volatility continued to suppress transactional activity. To this extent, the Fund’s underweight positions in both HMC Capital and Centuria Capital Group contributed to monthly relative performance. In what was a challenging month for absolute returns, the Fund’s overweight position in Peet Limited positively contributed on the back of improving residential momentum and a moderation in the cash rate outlook.
The month’s outperformers were typically real estate securities with low leverage, against a backdrop of mounting credit concerns. As such, the Fund’s underweight positions in BWP Trust and Waypoint REIT were the biggest detractors to relative performance, given their defensive portfolios and capital structures.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-21.pdfFebruary, 2023
The Fund returned -0.74% during February, marginally underperforming the S&P/ASX 300 AREIT Accumulation Index return of -0.36%.
The main contributors to relative performance included the Fund’s overweight position in National Storage REIT, which upgraded earnings guidance on the back of resilient customer demand and robust rate growth across its portfolio. The Fund also benefited from an overweight position in Arena REIT, which similarly outperformed market expectations and demonstrated resilient childcare fundamentals with strong inflation-capture in its rental contracts and improving development returns.
Detractors to performance included the Fund’s overweight position in Rural Funds Group, which is currently ramping up its development program and faced minor earnings impacts from commodity price volatility in its operating assets and adverse weather. The Fund’s overweight position in Ingenia Communities Group also detracted from performance, which downgraded its residential settlement guidance, citing delays due to labour constraints and weather impacting construction timeframes. Looking beyond the current reporting period, we believe Ingenia will continue to benefit from the structural drivers underpinning the lifestyle communities sector, such as an aging population supported by government rent assistance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-20.pdfJanuary, 2023
The Fund delivered a strong 7.94% monthly gain during January, largely in line with the S&P/ASX 300 AREIT Accumulation Index return of 8.07%. During the month, the main contributors to relative performance included the Fund’s underweight position in Region Group, which lagged the market as a defensive nondiscretionary retail exposure.
The Fund also benefited from an overweight position in Goodman Group, which re-rated sharply during January and is benefiting from continued strong rental growth outcomes with an enviable global development pipeline. Detractors to performance included the Fund’s overweight position in National Storage REIT.
The storage asset owner underperformed the market as the share price consolidated after recent gains. We continue to believe the REIT will outperform in the medium term, benefiting from short duration lease terms allowing for capture of positive rental reversion.
The Fund’s overweight position in Arena REIT also detracted from performance, despite the childcare operator benefiting from a high proportion of inflation-linked triple net leases. We continue to believe the Group is well placed to deliver ongoing earnings growth, underpinned by a supportive regulatory environment.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-19.pdfDecember, 2022
The Fund declined by ‐4.82% during December, underperforming the S&P/ASX 300 AREIT Index by ‐0.78%. During the month, the top contributor to performance was the Fund’s underweight position in HMC Capital, which was removed from the FTSE EPRA NAREIT Global Real Estate Index during its quarterly rebalance. The Fund also benefited from an overweight position in Arena REIT, which released a positive market update headlined by strong rental growth and valuation increases.
The Fund continues to be attracted to the childcare sector due to strong operator profitability and increasing levels of government support. Monthly detractors to performance include the Fund’s overweight position in Rural Funds Group, which increased its interest rate hedging profile after securing a key 40‐year lease to develop macadamia orchards by 2024. We continue to believe Rural Funds Group is well placed to grow via their strategy of agricultural land conversion to its highest and best use.
The Fund’s overweight position in Charter Hall Group also detracted from performance, following announcements that global investment funds were limiting redemption requests. We are encouraged by Charter Hall’s growth outlook, with the fund manager having significant investment capacity to fund ongoing transaction activity and platform expansion.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-18.pdfNovember, 2022
The Fund delivered a 6.03% net return during November, outperforming the S&P/ASX 300 AREIT Accumulation Index return of 5.81%. During the month, the main contributor to relative performance was the Fund’s overweight position in Goodman Group. The industrial fund manager benefited from a positive 1Q23 update and we continue to believe the Group is well placed to deliver ongoing earnings growth, underpinned by an enviable global development pipeline. The Fund also benefited from an underweight position in BWP Trust, which underperformed the market during November as passive names lagged peers. Detractors to performance included the Fund’s overweight position in National Storage REIT. The storage asset owner underperformed the market as the share price consolidated after recent gains. We continue to believe the REIT will outperform in the medium term, benefiting from short duration lease terms allowing for capture of positive rental reversion. The Fund’s overweight position in Arena REIT also detracted from performance, despite the childcare operator benefiting from inflation-linked triple net leases. We continue to believe the Group is well placed to deliver ongoing earnings growth, underpinned by a supportive regulatory environment.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-17.pdfOctober, 2022
The Fund delivered a 10.25% return during October, outperforming the S&P/ASX 300 AREIT Accumulation Index return of 9.87%. During the month, the main contributor to relative performance was the Fund’s overweight position in Arena REIT. The childcare landlord benefits from inflation-linked triple net leases acting as a strong inflation hedge. We continue to believe the Group is well placed to deliver ongoing earnings growth, underpinned by a supportive regulatory environment. The Fund also benefited from an overweight position in National Storage REIT. The storage asset portfolio has performed well due to short duration leases and strong rental growth. Detractors to performance included the Fund’s underweight position in Centuria Industrial REIT which reported strong underlying market fundamentals; however, the Group’s earnings continue to be impacted by rising funding costs and low interest rate hedging. The Fund’s underweight position in fuel and convenience landlord, Waypoint REIT, also detracted from performance, which continues to be supported by an active share buyback.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-16.pdfSeptember, 2022
The portfolio delivered a 5.18% return in the September quarter outperforming the benchmark return of 4.80% (S&P/ASX 300 AREIT Index). While the quarter was positive from an absolute and relative perspective, A-REITs took a breather in the month of September with 1) retail/value names outperforming as the reopening trade gathered momentum, and 2) a selloff in the 10-year bond yields 1.49% (+33bp) acted as a sector headwind.
The portfolio was down - 2.2% in September, modestly underperforming the benchmark (-1.9%). In the past 12 months the fund has delivered a 34.12% return materially outperforming the benchmark’s 30.69% return. Positive contributors to relative performance for the month came from overweight exposures to fund manager HomeCo (+18.4%), land lease communities group Lifestyle Communities (+13.2%) and an underweight to underperforming Goodman Group (- 6.3%). HomeCo’s assets under management and earnings was boosted following successful capital raising efforts in recent month’s with HomeCo Daily Needs REIT acquiring A$220m of assets, partly funded via an A$88m placement.
HealthCo REIT (new HomeCo’s sponsored REIT) successfully debuted in early September after an initial public offering (IPO) raising A$650m in August. Detractors to relative performance came from underweights to outperforming Scentre (+4.9%) and GPT Group (+4.5%), with both groups boosted by continued momentum from the reopening trade. Lend Lease (- 9.1%) overweight dragged on performance as the market continued to digest re-based guidance and a cautious tone for FY22 outlook.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-15.pdfJuly, 2022
The Fund delivered an +11.78% return during July, in line with the S&P/ASX 300 AREIT Accumulation Index return of +11.78%. During the month, the main contributor to relative performance was the Fund’s underweight position in Stockland, which is leveraged to a slowing residential housing market and will become a taxpayer from next year onwards.
The Fund also benefited from an overweight position in Goodman Group, following the market’s rotation into growth names as bond yields moderated. Detractors to performance included the Fund’s overweight position in HomeCo Daily Needs REIT, which underperformed as a low beta name with resilient earnings. The Fund’s overweight position in Dexus also detracted from relative performance, following the loss of management rights to Collimate Capital’s $7.7bn AMP Capital Wholesale Office Fund.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-14.pdfMay, 2022
Portfolio performance
The Fund delivered a -8.0% return during May, outperforming the S&P/ASX 300 AREIT Index by +0.6%.
During the month, the main contributor to relative performance was the Fund’s overweight position in Rural Funds Group, which benefits from its uncorrelated asset returns versus traditional equities and its inflation hedge characteristics. The Fund’s overweight position in SCA Property Group was again a top contributor to relative performance, with supermarket inflation capturing turnover rent and increased institutional interest driving valuation support in the convenience retail sector.
Detractors to performance included the Fund’s underweight position in Vicinity Centres, which reported a positive quarterly update highlighting a continued recovery across visitation, sales and rent collections. The Fund’s overweight position in Charter Hall also detracted from relative performance, due to market concerns over the Group’s outlook for transactional activity and investor fund flows.
March, 2022
The Fund delivered a 1.90% return during March, outperforming the S&P/ASX 300 AREIT Index by +0.5%. During March, the top contributor to performance was the Fund’s overweight position in Rural Funds Group, which reported a solid financial result benefiting from productivity improvements in its cattle and cropping properties. The Fund also benefited from an overweight position in HomeCo, which was added to the S&P/ASX 200 Index mid-month and rebranded to HMC Capital, reflecting the Group’s ambition to become Australia’s leading alternative asset manager. Monthly detractors to performance included the Fund’s overweight position in Scentre Group, which consolidated the prior month’s strong performance, as well as an underweight position in Charter Hall Long WALE REIT, which has benefited from a high proportion of CPI-linked rent reviews in an inflationary environment.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-12.pdfFebruary, 2022
The Fund delivered a +0.83% return during February, underperforming the S&P/ASX 300 AREIT Index by -0.7%. During February, the main contributors to relative performance were the Fund’s overweight positions in Dexus and Scentre Group, which reported improving underlying fundamentals during their financial results. Detractors to performance included the Fund’s underweight position in Vicinity Centres, which announced strong earnings growth driven by a reversal of prior year waivers and provisioning. Rural Funds Group was also a detractor to performance during the month, despite announcing a solid result, underpinned by its long duration, triple net income profile
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-11.pdfJanuary, 2022
The Fund delivered a -10.25% return during January, underperforming the S&P/ASX 300 AREIT Index by - 0.8%. During December, the main contributors to relative performance were the Fund’s overweight positions in SCA Property Group and Vicinity Centres, which benefited from positive December portfolio revaluations. Detractors to performance came from overweight positions in fund managers Charter Hall Group and Home Consortium, which sold off due to rising bond yields and their higher relative earnings growth sensitivity.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-10.pdfDecember, 2021
The Fund delivered a 3.39% return during December, outperforming the S&P/ASX 300 AREIT Index by 0.15%. The Fund outperformed its benchmark over the 2021 calendar year by 224 bps, with the strongest relative contributions from fund managers Home Consortium and Charter Hall Group, as well as residential exposures such as Stockland, Lifestyle Communities and Ingenia Communities Group. During December, the main contributor to relative performance was the Fund’s underweight position in Stockland. Transactional evidence drove strong revaluation gains during the month and aided the Fund’s overweight positioning in SCA Property Group, Dexus Industria REIT and Charter Hall Social Infrastructure REIT. Monthly detractors to performance included the Fund’s underweight position in Waypoint REIT, which benefited from takeover speculation, whilst Vicinity Centres underperformed the market for the consecutive month due to fears surrounding the new omicron COVID variant and the potential impact to shopping centre visitation.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-9.pdfNovember, 2021
The Fund delivered a 3.66% return during November, underperforming the S&P/ASX 300 AREIT Index by - 0.3%. The Fund continues to significantly outperform its benchmark over the past twelve months with strong relative contribution from fund managers Home Consortium and Charter Hall Group, as well as selective residential exposures such as Lifestyle Communities, Ingenia Communities Group and Stockland. During November, Charter Hall Group was the strongest contributor to relative performance following its upgraded FY22 earnings guidance to +36% (previously +23%). Relative positioning in Rural Funds Group and Dexus also positively contributed to performance. Monthly detractors to performance included our underweight to Goodman Group, which delivered a solid quarterly update underpinned by momentum in its development business, whilst our overweight position in Vicinity Centres underperformed the market due to fears surrounding the new omicron COVID variant and the potential impact to shopping centre visitation.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-7.pdfOctober, 2021
The Fund delivered a +0.22% return during October, underperforming the S&P/ASX 300 AREIT Index by - 0.6%. The Fund continues to significantly outperform its benchmark over the past twelve months with strong relative contribution from the pure play fund managers (Home Consortium and Goodman Group) and selective residential exposures (Lifestyle Communities and Stockland). During October, Vicinity Centres was the strongest contributor to relative performance on the back of increased market transactional activity and broader evidence of price discovery within the discretionary retail sector. Alternative asset class exposures such as agriculture and childcare were also strong contributors to the Fund’s performance during the month. Detractors to performance included Mirvac Group, which delivered a solid quarterly result but sold off in late October due to macroeconomic concerns and a sharp rise in bond yields. HomeCo Daily Needs REIT was another detractor to Fund performance as a result of its friendly scrip-based takeover offer to merge with Aventus Group.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-6.pdfSeptember, 2021
The portfolio delivered a 5.18% return in the September quarter outperforming the benchmark return of 4.80% (S&P/ASX 300 AREIT Index). While the quarter was positive from an absolute and relative perspective, A-REITs took a breather in the month of September with 1) retail/value names outperforming as the reopening trade gathered momentum, and 2) a selloff in the 10-year bond yields 1.49% (+33bp) acted as a sector headwind. The portfolio was down - 2.2% in September, modestly underperforming the benchmark (-1.9%). In the past 12 months the fund has delivered a 34.12% return materially outperforming the benchmark’s 30.69% return.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-1-1.pdfAugust, 2021
The portfolio delivered a 6.15% return in August underperforming the benchmark return of 6.38% (S&P/ASX 300 AREIT Index). In the past 12 months the fund has delivered a 36.56% return materially outperforming the benchmark's 31.75% return. With reporting season now complete, AREIT’s continued to be supported by strong net tangible asset (NTA) value per share gains of over +8% on average for the year. Portfolio cap rates firmed by an average of 25bp for 1H21 and 38bp over the year. The sectors that showed the strongest cap rate compression was Industrial, non-discretionary (daily needs) retail, Large Format Retail, long WALE sectors and alternative asset classes such as Childcare. Discretionary regional mall cap rates were generally flat while Office cap rates compressed modestly.
Positive contributors to relative performance came from overweight exposure to discretionary retail exposed REITs Vicinity Centres, Fund Managers Centuria Capital, Home Consortium, Charter Hall and an underweight to BWP Trust. The market saw fit to look through Vicinity Centres mixed FY21 result, lack of FY22 earnings guidance and current COVID lockdowns in various states, preferring to focus on the potential for a “reopening trade” in the latter part of 2021 which should see strong growth for Retail REITs cash collection and retail sales.
The Australian REIT market (S&P/ASX 300 A-REIT Index) rose +6.4% in August, outperforming the broader equity market which rose 2.5% (S&P/ASX 200 Index). For the rolling 12-months, A-REITs have returned +31.8%, outperforming the broader market which has returned 28.1%. COVID cases associated with the Delta strain continued to rise through the month resulting in continued lockdowns across many parts of Australia with the Greater Sydney lockdown extended until at least the end of September and likely longer.
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The portfolio delivered a +1.28% return in July, outperforming the benchmark return of +0.47% (S&P/ASX 300 AREIT Accumulation Index). In the past 12 months, the fund has delivered a +39.44% return, materially outperforming the benchmark's +33.70% return. The AREIT sector was supported by further positive June half asset revaluations and moderations in 10-year bond yields, offsetting a deepening of lockdown measures in Greater Sydney.
Positive contributors to relative performance came from underweight exposure to discretionary retail exposed REITs Scentre Group and GPT. GPT withdrew its FY21 earnings guidance due to uncertainty over the new COVID outbreak whilst Scentre Groups 45% exposure to Sydney is also expected to be more heavily impacted by any future tenant abatements. Overweight exposure to fund Managers Home Consortium, Goodman and Charter Hall were all positive contributors to relative performance over the month aided by recent positive asset revaluations.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-4.pdfJune, 2021
The portfolio delivered a +6.05% return in June outperforming, the benchmark return of +5.56% (S&P/ASX 300 AREIT Accumulation Index). In the past 12 months, the fund has delivered a +38.14% return, materially outperforming the benchmark's +33.91% return.
The AREIT sector was supported by positive June asset revaluations and moderations in 10-year bond yields. Positive contributors to relative performance came from overweight exposure to Ingenia Communities, which continues to benefit from stronger residential prices across regional locations, unprecedented demand levels across their tourism parks, and strong sales enquiries across their lifestyle retirement villages. Underweight exposure to retail landlords Scentre Group also added with a pickup in COVID cases and new lockdown restrictions weighing on sentiment. Underweight exposure to National Storage was also a positive contributor following its large capital raising to fund future acquisitions. Overweight to fund managers Charter Hall and Home Consortium also added with rising asset valuations supporting the outlook for future funds management fees.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-3.pdfMay, 2021
The portfolio delivered a 1.96% return in May, outperforming the benchmark return of 1.78%% (S&P/ASX 300 AREIT Index). In the past 12 months, the fund has delivered a 28.73% return, materially outperforming the benchmark's 25.32% return. The AREIT sector was supported by positive quarterly updates including several earnings upgrades, supportive government budget, signs of improving leasing conditions and further supportive evidence in the direct real estate market.
The Australian REIT market (S&P/ASX 300 A-REIT Index) rose +1.8% in May, underperforming the broader equity market which rose 2.3% (S&P/ASX 200 Index). Positive quarterly updates, supportive measures from the Federal budget and continued positive transaction evidence helped to support the sector over the month.
Office physical occupancy is improving but remains soft with recent data suggesting Sydney occupancy was back at 6%, Brisbane 63% and Melbourne 41%. Leasing sentiment has improved with signs tenants are more willing to sign deals. Valuations appear likely to remain well supported and potentially even increase with AMP’s sale of 200 George Street in Sydney attracting strong bidding interest well above the current book valuation.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-2.pdfApril, 2021
The portfolio delivered a +3.63% return in April outperforming the benchmark return of +3.08% (S&P/ASX 300 AREIT Index). In the past 12 months the fund has delivered a +35.85% return materially outperforming the benchmark's +31.81% return. The AREIT sector was supported by positive quarterly updates including several earnings upgrades, signs of improving leasing conditions and further supportive evidence in the direct real estate market.
Positive contributors to relative performance came from overweight exposure to Mirvac Group which upgraded earnings guidance driven by stronger residential sales activity, whilst overweight exposure to fund managers Home Consortium and Charter Hall Group also benefited from expectations of higher asset valuations and earnings. Underweight exposure to retail landlord Scentre Group was another positive contributor to relative performance with investors preferring higher growth sectors.
The Australian REIT market (S&P/ASX 300 A-REIT Index) rose +3.1% in April, underperforming the broader equity market which rose +3.5% (S&P/ASX 200 Index). A host of positive quarterly updates, several earnings upgrades and continued positive transaction evidence helped to support the sector.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities-1.pdfDecember, 2020
After fees and expenses, the portfolio increased by 1.08% over the month, outperforming its benchmark by 48bps. In the past 12 months, the fund has delivered a 0.8% return and materially outperformed the -4.0% benchmark return. Positive transaction evidence and firming house prices supported the sector, offsetting the pickup in COVID cases in Sydney which weighed on the retail sector late in the month. The funds relative outperformance was driven by overweight exposure to the land lease retirement sector, with both Ingenia and Lifestyle Communities outperforming the market. Ingenia provided a sales update in December noting strong sales momentum and positive reservations trends across is holiday park business. Charter Hall Social Infrastructure was also a strong contributor to performance after announcing a sale of its remaining 20 NZ childcare properties and reiterated FY21 distribution guidance. Detractors to relative performance came from the funds underweight exposure to Charter Hall Group (CHC), Goodman Group (GMG) and Mirvac. CHC & GMG benefited from continued strong transaction evidence in the industrial market, whilst CHC completed another acquisition through its unlisted funds. Positive sentiment towards the housing market also supported Mirvac.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ubs_property_securities.pdfasset_class: Property and Infrastructure
asset_category: Australian Listed Property
peer_benchmark: Property - Australian Listed Property Index
broad_market_index: ASX Index 200 A-REIT Index
manager_contact_details: Array
ticker: SBC0816AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
fund_features:
UBS Property Securities Fund aims to outperform (after management costs) the S&P/ASX 300 Property Accumulation Index over rolling five year periods. The Fund is a portfolio of mainly Australian real estate securities that the Portfolio Manager believes are being undervalued by the market. Eligible investments of the Fund comprise property securities listed on Australian and international recognized exchanges or those we reasonably expect to list within six months. The Fund may invest in financial derivatives to adjust exposure to property securities or to manage investment risk. The Fund can hold a maximum of 20% international property securities and a maximum of 5% Australian listed non benchmark securities. If international property securities are held in the portfolio, they will not necessarily be hedged to the Australian Dollar.
structure: Managed Fund