Real Estate Investment Trusts (REITs) are a favourite for long term Aussie investors. REITs are popular for two main reasons:
– They enable a fractional ownership of some very large real estate assets that are otherwise beyond retail investors (shopping centres, CBD sky-scrapers etc.)
– They’re renowned for large and steady dividends
The last few years REITs have provided great returns to investors, some say it has been a ‘rising tide lifts all boats’ . However the last few months there have been large cracks within the REIT sector.
Good REITs are separating from the bad.
Here are the top 12 REITs, the worst four large-cap REITs and the charts that show how big the cracks already are:
Top 12 REITs that have beaten the sector (XPJ) over the last year, ranked by their performance in 2016 so far.
| Rank | Code | Description | Last 3 Months’ Return | Last 12 Months’ Return |
| 1 | GJT | Galileo Japan Trust | 30.43% | 22.50% |
| 2 | AJA | Astro Jap Prop Group | 22.13% | 18.45% |
| 3 | LTN | Lantern Hotel Grp | 17.65% | 17.00% |
| 4 | ARF | Arena REIT. | 11.24% | 15.91% |
| 5 | CDP | Carindale Property | 11.11% | 9.34% |
| 6 | CQR | Charter Hall Retail | 9.35% | 6.14% |
| 7 | RFF | Rural Funds Group | 8.93% | 31.98% |
| 8 | BWP | BWP Trust | 8.23% | 13.45% |
| 9 | SCP | SCA Property Group | 6.57% | 10.57% |
| 10 | LEP | ALE Property Group | 6.51% | 6.85% |
| 11 | GMG | Goodman Group | 6.06% | 5.41% |
| 12 | DXS | Dexus Property Group | 5.33% | 4.18% |
Bottom Blue-Chip REITs:
| Rank | Code | Description | Last 3 Months’ Return | Last 12 Months’ Return |
| 1 | SGP | Stockland | 2.44% | -7.14% |
| 2 | MGR | Mirvac Group | -4.55% | -5.56% |
| 3 | CHC | Charter Hall Group | 2.20% | -9.70% |
| 4 | CMW | Cromwell Prop | -0.48% | -7.18% |
Top 3 REITs against the Bottom 3 Blue-chips over the last year:
The previous opens up a lot questions?
• Why are the cracks beginning to show?
• Does this mean that the sector fraught with danger
• How do we distinguish a Good REIT from other REITs
• Are there sub-sectors that are particularly at risk for REITs and why?
• Are there any protections for these risks?
I will address each of these questions in my next article.
