September, 2023
The Fund fell with the market over the September quarter but was ahead of the index return by 0.42%. Calendar year-to-date, the Fund has edged ahead of the positive index return.
Underweight positions that contributed positively in the quarter included Charter Hall Long WALE, Waypoint, Cromwell Property Group and Region Group. The long WALE stocks (Chater Hall Long WALE and Waypoint) tend to be more sensitive to bond yields, though were also impacted after management guided to lower earnings. In addition, these stocks have elevated gearing. Cromwell underperformed as it is highly leveraged, has high office exposure, and the business is also exposed to Europe via its European funds management business. Convenience retailer, Region Group, fell after it guided to lower earnings.
The underweight position in Goodman Group detracted over the quarter after the stock rose following the announcement that the company will start to develop, own, and manage data centres.
The overweight position in GDI Property Group detracted. GDI Property Group continues to be hampered by slower leasing in Perth and
the market remains concerned about its exposure to office and stubbornly high vacancy.
At quarter end the investment team increased exposure to office stocks via Growthpoint, Abacus Group. Dexus and Centuria Office, as these names have underperformed and trade at meaningful discounts to Net Tangible Assets (NTA). Exposure to the fund managers was also increased via Charter Hall Group and Centuria Group following significant underperformance
Exposure was reduced to Homeco Health and Wellness, Homeco Daily Needs, Unibail. Dexus Industria and Vicinity Homeco Health and Wellness significantly outperformed the market an index inclusion and is now one of the more expensive stocks in the sector. Homeco Daily Needs also outperformed on Index upweighting. The overweight to Unibail was trimmed slightly on outperformance Dexus Industria was used as a funding tool for much better value in the office and fund manager names. Vicinity was trimmed on continued outperformance
Abacus demerged during the quarter forming Abacus Group and Abacus Storage King. The demerger saw the Fund move from a 0.25% overweight in Abacus to a 0.10% overweight in the two demerged vehicles.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-1-1.pdfAugust, 2023
The Fund produced a solid return of 2.18% in August which was in line with the index return. For the 12 months to 31 August 2023, the Fund is ahead of the strong index return.
Underweight positions that contributed positively in August included the long WALE stocks, Region Group, Centuria, Growthpoint, Dexus and Cromwell. The long WALE stocks (Chater Hall Long WALE, Waypoint, and Charter Hall Education) fell after management guided to lower earnings. In addition, these stocks have elevated gearing. Convenience retailer, Region Group, fell after it guided to lower earnings. Similarly, Centuria fell after guiding to a significant fall in earnings. Office stocks, Growthpoint, Dexus and Cromwell, all contributed positively post earnings downgrades and gearing concerns for Cromwell and Growthpoint.
The underweight to Goodman Group detracted after the stocks rose following the announcement that the company will start to develop, own, and manage data centres. Overweight positions that detracted from performance included deep value holdings - GDI Property Group, Unibail and Finbar. GDI Property Group continues to be hampered by slower leasing in Perth. Unibail was impacted by its high gearing and limited progress on asset sales. Finbar was impacted by slow apartment sales.
During August the investment team added to Charter Hall Group after significant underperformance and a rebasing of earnings. National Storage was also increased, although it remains an underweight position, as it underperformed on the back of very weak performance of US self-storage companies.
Exposure to Scentre, Vicinity and Unibail was reduced as these stocks have outperformed in recent months. The Fund remains overweight in all three names; however, the retail environment is expected to remain under pressure in the short term due to a constrained consumer. HMC Capital was also reduced as it has significantly outperformed the market.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-16.pdfJuly, 2023
The Fund produced a solid return of 4.08% in July which was ahead of the strong index return. For the 12 months to 31 July 2023, the Fund has produced a positive absolute return which is ahead of the negative index return.
The main positive contributors included the overweight to Unibail and Scentre which are generally oversold and perceived as beneficiaries of falling interest rates.
Underweight positions that contributed positively included National Storage and Goodman Group. National Storage underperformed due to switching into Abacus Storage. Fund manager, Goodman Group, fell as investors sought out less expensive names.
The main detractors from performance included the overweight in Carindale which interestingly underperformed even though all the other mall trusts outperformed. The stock has relatively low liquidity which may explain the price fall in July.
Underweight positions in Region and Rural Funds detracted. Both names outperformed as investors bought previous underperformers as they see the interest rate environment changing.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-15.pdfJune, 2023
The Fund produced a solid return of 2.17% in the June quarter but was unable to outpace the strong index return of 3.15%.
The top contributors to performance in the quarter included underweight positions in Charter Hall Long WALE, National Storage REIT, Rural Funds Group and Region Group. Charter Hall Long WALE underperformed in June after announcing a 5.8% fall in assets values. National Storage underperformed after announcing that revenue per available square meter fell in April and May. Rural Funds underperformed because some of its commodities (Almonds and Macadamias) encountered difficult trading conditions. Region underperformed post several broker downgrades that highlighted expenses were growing faster than revenue.
The top detractors from performance included overweight positions in Scentre, Carindale, Unibail, Vicinity, GDI and Aspen. The malls stocks, Scentre, Carindale, Unibail and Vicinity, all detracted from performance as the market has become concerned about a slowdown in retail sales. In addition, several retailers announced soft trading updates during the quarter. GDI is a deep value position that suffers from being exposed to office. Additionally, at the end of the quarter, it was announced that the former CEO had 8m shares called as collateral for a margin loan which put short-term selling pressure on the stock. The investment team believes that GDI is trading at a very attractive yield and discount to Net Tangible Assets. Aspen underperformed on the back of profit taking. Despite the negative share price performance at quarter end, Aspen continues to perform strongly with management providing a positive business and valuation update in June.
Underweight positions that detracted from performance included Goodman Group and Centuria Capital. The underweight in Goodman Group detracted as the stock outperformed after management upgraded earnings guidance. Goodman also benefited in the quarter from “defensive” buying and the company’s announcement that it intends to move into the data centre funds management space.
At the end of the quarter the investment team continued to trim Stockland as interest rates are expected to continue to rise and stay higher for longer. The rate rises may negatively impact house prices, which are expected to stall or fall again later this year.
On the buying, exposure to GDI was increased at quarter end. The stock has been trading at a very attractive price-to-earnings ratio and is at significant discount to net tangible assets. Finally, exposure to HomeCo Health and Wellness was trimmed after it outperformed the market on the expectation of index inclusion and positive revaluations.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-14.pdfMay, 2023
The Fund fell with the market in May, though was unable to outperform the index return.
The main positive contributors included the underweight in Rural Funds which underperformed because some of its commodities (Almonds and Macadamias) have encountered difficult trading conditions. Other underweight positions that contributed positively included Bunnings, Growthpoint and GPT.
Overweight positions that contributed positively included Homeco Health & Wellness and Aspen. Homeco Health & Wellness recouped some of the underperformance in the previous month following the cap raise for the Healthscope acquisition. Aspen continues to benefit from the trend towards affordable housing.
The overweights in malls stocks, Unibail, Scentre, Vicinity and Carindale, all detracted from performance as the market has become concerned about a slowdown in retail sales. In addition, several retailers announced soft trading updates in recent weeks.
Underweight positions that detracted from performance included Goodman Group and Dexus. Goodman Group outperformed after the company upgraded earnings guidance. Office stocks generally outperformed, including Dexus, as most portfolios showed resilient occupancy in their updates.
Overweight positions that were trimmed included Scentre, Stockland, Ingenia and Aspen. Scentre was decreased to reduce the Fund’s mall exposure as discretionary sales begin to slow and in favour of other stocks that have become heavily discounted. Stockland was reduced given its strong performance since the end of February. Ingenia was trimmed as it has rallied and became more expensive post its earnings downgrade. Aspen was reduced as it has been a strong performer.
The underweight in Charter Hall Group was reduced as the stock has been a heavy underperformer and it is trading at a much lower multiple, albeit with some earnings risk. The underweight in Dexus was similarly reduced as the stock has underperformed due to the market’s negative sentiment towards office, and the discount to net tangible assets has opened to approximately 30%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-13.pdfApril, 2023
The Fund produced a solid return of 4.83% in April but was slightly behind the strong index return. For the 12 months to 30 April 2023, the Fund is comfortably ahead of the index return.
Overweights that contributed positively to performance included Stockland which outperformed on the back of the RBA pause and amid market expectations that house prices and volumes will increase.
Underweights that contributed positively included National Storage, Goodman and Waypoint. National Storage underperformed after strong outperformance in recent months and a large capital raise in March. Goodman underperformed as investors switched into more laggard funds management names. Waypoint underperformed following buyback-driven outperformance and as investors rotated into inexpensive, more interest rate sensitive names.
Overweight positions that contributed negatively to performance were Carindale, GDI and Aspen. All of these stocks are small companies that got left behind in the rally that was focused on residential developers and fund managers. Unibail was similarly affected. In addition, mall landlords Carindale and Unibail may be suffering from rotation away from retail exposed names. GDI also appears to be caught up in the negative sentiment for office.
Underweights that detracted from performance included Mirvac and Centuria. Mirvac outperformed on the back of the pause in rate rises by the RBA and a positive outlook for house prices and volumes. Centuria recovered from selling in previous months and also benefited from takeover rumours.
The Fund reduced exposure to National Storage and Goodman early in the month on the back of recent outperformance, with both stocks trading at relatively high valuation multiples.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-12.pdfMarch, 2023
The Fund edged ahead in the March quarter and outperformed the index return. For the 12 months to 31 March 2023, the Fund is comfortably ahead of the index return.
Overweight positions that contributed positively included Unibail and Carindale. Unibail benefited from a falling interest rate outlook, improving cost of living in Europe, and progress on US asset sales. Unibail also performed well after the company surprised on earnings and guidance for 2023. Carindale delivered a solid result during the quarter and has benefited from being inexpensive relative to other mall owners. The stock also benefited from being deep value and subsequently fell less than the index towards the end of the quarter.
Underweight positions that contributed positively included Region, Rural Funds and Cromwell Property. Region guided to lower earnings driven by increasing interest costs. Rural Funds contributed positively after announcing lower earnings that were driven by slower lease up on farms than the market expected. Cromwell Property contributed positively after earnings fell due to interest costs and announcing delays to strategy implementation due to market conditions. The stock also underperformed on the back of increasing concern around office assets due to high vacancy, uncertainty around the level of return to office and increasing evidence of falling values.
Overweight positions that detracted from performance included Scentre and Ingenia Communities. Scentre underperformed in the very strong market at the start of the quarter and was left behind by the surging fund managers that benefited from the switch into more growth orientated names on optimism around falling interest rates. Ingenia detracted as management downgraded earnings on the back of weaker sales and settlements.
The underweight position in Goodman detracted as it is viewed as a beneficiary of falling interest rates. The company also benefited from a strong update by US comparable, Prologis. Lastly, Goodman is benefiting from the strength of industrial and well above sector earnings growth. Goodman remains an underweight position given its relatively elevated valuation.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-11.pdfFebruary, 2023
The Fund fell marginally in February but edged ahead of the negative index return. Overweight positions that contributed positively to performance during the month included Carindale and Unibail. Carindale delivered a solid result and has benefited from being inexpensive relative to other mall owners. Unibail performed well after the company surprised on earnings and guidance for 2023. Underweight positions that contributed positively included Region and Charter Hall Education, as both names guided to lower earnings driven by increasing interest costs. Other underweight positions that contributed positively included Rural Funds, Cromwell Property, Charter Hall and Centuria Capital. Rural Funds contributed positively after announcing lower earnings that were driven by slower lease up on farms than the market expected. Cromwell contributed positively after earnings fell due to interest costs and announcing delays to strategy implementation due to market conditions.
The fund managers, Charter Hall and Centuria Capital, both contributed positively after providing guidance that was below consensus. Both companies also experienced falling equity flows and transaction volumes. Overweight positions that detracted from performance included Ingenia Communities and GDI Property. Ingenia detracted as management downgraded earnings on the back of weaker sales and settlements. The reason behind GDI’s underperformance wasn’t obvious, other than it is an office stock and got caught up in the negative sentiment for the sub-sector. Underweights that detracted from performance included National Storage and Arena. National Storage performed well after management upgraded earnings guidance and announced solid REVPAM (group revenue per available metre) growth. Arena’s stock performed well after the company delivered positive earnings growth due to strong CPI reviews over most of its portfolio. The Fund reduced exposure to Stockland during February because of a soft residential market and after it significantly outperformed Mirvac, which announced a very soft residential result.
The overweight in Vicinity was reduced following significant outperformance, plus the investment team has become more cautious on the consumer. The underweight in Charter Hall was increased after its strong rebound over the last couple of months. Additionally, asset values are anticipated to fall over the next 12 months which will negatively impact the business.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-10.pdfNovember, 2022
The Fund produced a strong return of 5.71% and was marginally behind the index return for the month. Calendar year-to-date, the Fund is comfortably ahead of the index return.
The main positive contributors included the final liquidation payment from BGP Holdings (ex-GPT spin off). Underweight positions in National Storage, Long WALE and grocery anchored names also contributed positively during the month. The underweight in National Storage benefited as the stock was sold off in the wake of weakening rent and occupancy in comparable US names. The underweight to the defensive Long WALE stocks (Bunning, Charter Hall Long WALE, Arena, Charter Hall Social Infrastructure, and Waypoint) and grocery anchored names (Region Group, renamed from Shopping Centres Australasia) aided performance as these stocks underperformed as investors rotated into key beneficiaries of falling rates, namely fund managers and residential developers. Overweight positions that contributed positively included Unibail and Aspen.
The overweight to Unibail contributed strongly following significant underperformance, benefiting from value buying. The overweight to Aspen contributed positively as the stock benefited from the rotation into residential developers. The main negative contributors included the underweight to Goodman Group which benefited from a strong quarterly update and rotation into fund manager and developers on the back of falling bond yields. Overweight positions that detracted from performance included Carindale, GDI and Scentre. These names underperformed as the market rotated into the fund managers and residential developers. Additionally, GDI became involved in the increasingly negative sentiment towards office. The investment team reduced exposure to the fund managers, Goodman Group and Centuria, as well as residential developers, Stockland and Mirvac, as these names have outperformed as investors rotated into stocks that are perceived to benefit from falling bond yields and lower interest rates. Despite the tough outlook for office stocks the underweight in Dexus was slightly reduced in November following further underperformance, as value is emerging in the name.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-9.pdfOctober, 2022
The Fund produced an impressive return of 8.86% in October but could not keep pace with the stellar index return. Calendar year-to-date, the Fund is ahead of the weak index return.
The main positive contributors included overweight positions in the mall names, Scentre and Vicinity, as these names are benefitting from continued strong retail sales growth and improving leasing spreads. The overweight to Unibail also benefitted as the stock outperformed after being very oversold. The underweight to Dexus contributed positively after the Property Council of Australia released data showing office occupation had stalled at 50% in Sydney and Melbourne. Global real estate services company, Jones Lang Lasalle, also reported vacancy had increased in Sydney due to negative net absorption. The underweight to Goodman contributed positively as US industrial company, Prologis, reported that it is cautious on the outlook due to rising interest rates and a softening economy. The main negative contributors included the overweight to cash and overweight positions in a number of small company names that got left behind in the rally. These included GDI, Carindale, Aspen, Finbar and Elanor. GDI may have also been impacted by general office selling, while Aspen and Finbar may also have been caught up in residential developer underperformance. Similarly, Elanor appears to have been impacted by fund manager underperformance. Underweights to National Storage, Arena, Waypoint and Centuria Industrial also detracted from performance. National Storage detracted as the market continues to buy the structural story of increased storage usage. The underweights to the Long WALEs hurt as these names benefited from falling bond yields and their more defensive characteristics. The underweight to Centuria Industrial detracted as it outperformed after releasing strong quarterly results. The investment team reduced a number of the underweights in October that had significantly underperformed in the prior month. These names included Centuria Industrial, Goodman, Dexus and GPT. Although they are starting to represent better value, the Fund remains underweight in these companies. Exposure was also increased to Unibail and Carindale as both stocks still offer some of the best value in the sector. Exposure to Garda, Homeco Daily Needs and Vicinity was reduced as all of these names have outperformed. The underweight to Homeco Capital was increased despite recent underperformance as it is still expensive relative to the sector.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-8.pdfSeptember, 2022
The Fund fell with the market in the September quarter but did not fall as much as the AREIT index. Calendar year-to-date, the Fund is comfortably ahead of the negative index return.
The main positive contributors included overweight positions in Scentre Group and Aspen. Mall stock Scentre Group reported strong results and offered better guidance than the market was expecting, driven by stronger operating performance. The overweight to residential name, Aspen, also contributed positively after reporting a strong result on the back of its affordable housing exposure and as the stock benefitted from more dovish remarks by the Reserve Bank of Australia. Underweight positions in Shopping Centres Australasia, Arena REIT, Goodman Group and Dexus also contributed positively. Defensive stocks Shopping Centres Australasia and Arena REIT had become overvalued and underperformed after guiding to falling asset values or on weaker guidance. Fund Manager Goodman Group is particularly sensitive to rising rates and falling asset values. Office stock Dexus underperformed on weaker guidance as the outlook for office has weakened and following the loss of a key mandate.
The main negative contributor included the overweight to Unibail which continues to underperform on the back of a weakening economic environment in key markets and concerns around its ability to de-lever. Unibail is trading at a discount to Net Tangible Assets of over 50% and remains an overweight position in the Fund. The overweight position in GDI also detracted earlier in the quarter as it is yet to achieve leasing traction in its Perth office buildings. The underweights in Charter Hall Group and Waypoint detracted as both companies reported solid results. Finally, the underweight to National Storage detracted as the market continues to believe that it can deliver strong growth in a slowing economy and weakening housing market.
The investment team decreased the underweights in Dexus, GPT and Abacus as these names have all underperformed and represent significantly improved value. The overweights in Aspen and Unibail were increased. Aspen was increased via a capital raise which was at a 5% discount. Unibail was increased following significant underperformance and offers extreme value at a low price-to-earnings multiple of 4.5x. Exposure to Cromwell was reduced due to it being highly levered in a rising interest rate environment. The company’s deleveraging strategy is at risk due to rising bond yields and as its fund manager spin-off strategy has been suspended given current market conditions. National Storage was reduced as it has outperformed and is now one of the most expensive stocks in the sector, despite being at risk from the slowing housing market.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-7.pdfAugust, 2022
The Fund fell with the market in August but did not fall as much as the AREIT index. Calendar year-to-date, the Fund is also comfortably ahead of the index return. The main positive contributors included overweight positions in the mall stocks, Scentre Group and Carindale, both of which reported strong results and offered better guidance than the market was expecting, driven by stronger operating performance. Underweight positions that contributed positively included defensive stocks Arena, Shopping Centres Australasia and Bunnings. Underweight positions in the fund managers, Centuria Capital and Goodman, also contributed positively. The overweight in Aspen, which had a strong result on the back of its affordable housing exposure, also contributed positively. The main negative contributors included the underweight in Charter Hall Group which reported a better-than-expected result. The overweight in GDI detracted as the company still hasn’t achieved much leasing traction in its Perth office buildings. The underweight in Waypoint detracted as the company reported a solid result. Lastly, the overweight in Stockland detracted due to management reporting that residential sales are slowing. The investment team increased the overweights in mall stocks, Unibail and Scentre, as both names represent good value and their operating metrics have continued to improve. The overweight in Vicinity was reduced slightly as it has significantly outperformed this calendar year and now trades at a tighter discount to net tangible assets than Scentre. Exposure to Cromwell was reduced and moved to an underweight position as the stock price has held up relatively well despite high gearing and management not being able to implement the strategy to spin off Cromwell’s office portfolio and de-leverage.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-6.pdfJune, 2022
The Fund fell with the market in the quarter but was comfortably ahead of the index return by 1.52%. In the first six months of the Calendar Year, the Fund solidly outperformed the index return by 2.46%.
Positive contributors included the overweights in mall stocks, Vicinity, Carindale and Scentre, as the retail recovery has been better than expected with sales increasing higher than pre-COVID levels in non-central business district malls. In addition, mall stocks are seen as potential beneficiaries of higher inflation via their rent review mechanisms.
Overweight positions that detracted included Unibail, which continues to be impacted by concerns around Europe, general concerns around the consumer and concerns around whether the company can sell its assets and deleverage the portfolio. Underweights that contributed positively included Charter Hall and Goodman Group. The fund managers are seen as the most exposed to rising interest rates, increasing investor concern around future earnings growth, leading to a multiple de-rate. In addition, Amazon’s comments of excess capacity in its fulfillment network negatively impacted Goodman Group.
The main underweight positions that detracted were in stocks exposed to defensive, neighbourhood shopping centres such as Shopping Centres Australasia. Other defensive stocks that outperformed included Bunnings and Rural Funds Group. The investment team continued to add to the Carindale overweight, as the stock remains extremely cheap at a significant discount to net tangible assets (NTA) despite the recovery in sales that is occurring.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-5.pdfApril, 2022
The Fund rose modestly in April and was marginally behind the index return. Calendar year-to-date, the Fund is comfortably ahead of the weak index return.
The main positive contributors included the underweight to Charter Hall Group and the overweight to GDI. Charter Hall underperformed as the market continues to be concerned that fund managers will face a challenging time with rising interest rates and potentially falling asset values. GDI outperformed as buying continued post the reopening of the Western Australia border and optimism about its ability to lease its buildings.
The main negative contributors included the underweights to Goodman Group and Shopping Centres Australasia. Goodman benefited from a very strong quarterly update from its US competitor, Prologis. Shopping Centres Australasia benefited from defensive buying due to its supermarket exposure.
Overweight positions that detracted included Stockland and Scentre. Stockland underperformed in the face of rising interest rates and the expected impact on house prices. Scentre underperformed due to its exposure to discretionary spending in a rising interest rate environment.
During April the investment team added to Abacus, Investec and Carindale.
Abacus – The Fund participated in a capital raise at a 10% discount to net tangible assets (NTA) Investec – The stock was trading at a 10% discount to its cash takeover price.
Carindale - Continues to offer significant value at a 30% discount to NTA.
Charter Hall Long WALE was fully exited in April because it is expensive and is expected to underperform in a rising interest rate environment. The investment team also continued to reduce Australian Unity as it approached fair value and will most likely struggle to release its large impending vacancies in the short term.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-4.pdfSeptember, 2021
The Fund produced a very strong return of 4.31% for the quarter which was marginally behind the impressive index return. For the 12 months to 30 September 2021, the Fund is comfortably outperforming the index by 1.57%.
The overweight to Scentre a benefited over the quarter as the company delivered better-than-expected results and provided a more resilient outlook following the announcement of the NSW roadmap for exiting lockdown. The underweight to Dexus contributed positively over the quarter as management announced a soft outlook due to the company being heavily impacted by the current lockdowns. Additionally, the recovery of office from the lockdowns is expected to be slower than retail in the reopening trade.
Negative contributors included the overweights to Stockland and Unibail. Stockland underperformed early in the quarter mainly due to their retail and office exposures and potentially around the impact on residential sales during lockdown. Unibail underperformed over concerns around the strength of the rebound of retail sales and the impact on earnings from its mall business. Lastly, underweight positions that detracted in the quarter included Charter Hall Group which performed well after the company guided to above market growth in 2022.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-3.pdfJune, 2021
The AREIT market surged in the June quarter, rising by 10.74%. The key driver for the performance was falling global bond yields and increasing risk aversion as the Delta strain of COVID-19 saw an acceleration in daily cases, particularly in the UK. The Australian economy continued to power along, reflected by the slightly less dovish comments from the Governor of the Reserve Bank of Australia. Employment surged 85,000 (75,000 was full time workers) and unemployment fell back to pre-COVID-19 levels. NAB business confidence softened but businessconditions surged. Consumer confidence similarly fell but is still up strongly year-over-year, the fall being driven by recent COVID-19 outbreaks and lockdowns.Australian house prices continued to rise with Sydney up 2.6% for the month of June.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-2.pdfApril, 2021
The AREIT market advanced in April, driven by a minor reversion in the bond yield, a significant second wave of COVID-19 in India, caution around AstraZeneca’s
link to blood clotting and some retracement in the out and about trade globally. The Australian economy continues to rebound strongly. April house prices rose 1.7% with Sydney leading the charge at 2.1%. First quarter CPI disappointed at 0.6%, driven by homebuilder grants and lower electricity prices. Housing finance continued to surge with housing credit up 0.5% and 4.1% year-over-year. Employment rose 70,000 and unemployment fell to 5.6%.
The main news of the month included: Completion of Blackstone/Milestone industrial portfolio sale for $3.8b or a 4.5% yield. This was followed by an $850m industrial portfolio selldown by Blackstone to Manulife also at a 4.5% cap rate. The Dexus merger of DWPF and the AMP fund ADPF was approved. This is $5b fund although it has a $2.0b redemption facility. Dexus has agreed to offer $400m immediately and progress the remaining unsatisfied redemptions over the next 18 months via asset sales. In M&A news, the battle for Vital Harvest continued with the final price being $1.26 after starting at $1.00 last year.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus-1.pdfDecember, 2021
The Fund produced a solid return in the December quarter, rising by 15.73% and comfortably outperforming the index return. By far the largest contributor to performance was the overweights in mall stocks, as Unibail, Scentre, Vicinity and Carindale all outperformed on the vaccine news. Additionally, Unibail shareholders voted against a very dilutive equity capital raising that had been proposed by management, which saw the stock being the largest single contributor to outperformance.
Other contributors included the overweight in Vital Harvest, which contributed positively as it was the recipient of a takeover offer by Macquarie Bank at a 25% premium to the then market price. The overweight in Elanor Retail was also a major contributor as it sold one of its shopping centres at a premium to book value, alleviating all concerns around gearing and thus the need to have a dilutive capital raising. The underweight in Goodman Group was a positive contributor as well as the stock underperformed due to having reached a very expensive PE multiple of circa 30x after its outperformance earlier in the year. Having been a beneficiary of COVID via the extra demand for ecommerce, it is logical that Goodman would underperform in even a partial reversal of COVID concerns. The underweights in Cromwell and Abacus were positive contributors. In the case of Cromwell, management has been in a state of upheaval since major shareholder ARA succeeded in removing Directors and the CEO. Abacus underperformed after a substantial capital raising which is initially earnings dilutive until the proceeds can be deployed. Finally, the underweight in Dexus contributed positively as sentiment towards office markets remains subdued due to increasing vacancy in the Sydney and Melbourne CBD markets and increasing leasing incentives. Cash was the biggest detractor due to the stronger market. The underweight in Shopping Centres Australasia detracted as the stock outperformed during the second lockdown in Victoria due to its defensive characteristics, being mainly neighbourhood centres anchored by supermarkets.
The underweight in Mirvac detracted as it benefited from the vaccine announcement which also helped residential stocks. Housing data (sales volumes and prices) has been improving rapidly in Australia, aided by the HomeBuilder stimulus. The main positive contributors to performance in the quarter included the overweights to Unibail and the Australian malls (Scentre, Vicinity and Carindale), which benefited from news of the vaccine. As noted above, Unibail also benefited from shareholders voting against the dilutive cap raise.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/ZUR0064AU-fund-focus.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: ZUR0064AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
Performance
Download Latest Fund Focus Report
fund_features:
Zurich Investments Australian Property Securities aims to provide investors with an income stream and capital growth over the medium to long term and to outperform the S&P/ASX 300 AREIT Accumulation Index over a period of five years. The Fund invests in a range of listed property securities, spread primarily across retail, commercial, industrial and residential property sectors. The Fund suits investors seeking exposure to Australia’s diverse property market, through investing in property trusts listed on the ASX.
structure: Managed Fund