Reitway Global | Fund Commentary | August 2022

                                                                  

  • Global Real Estate returns dropped in August despite strong operational performance
  • There are 28 sectors and subsectors available in the asset class
  • Real Estate fundamentals remain sound

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Market Commentary

In August, Real Estate Investment Trusts (REITs) had another setback as they continue to be caught up in the broader market volatility which is dragging down equity prices. Our benchmark, the GPR 250 REIT World Index lost 6.23% (USD) in the month. Real Estate is down 17.4% for the year, comparable with Equities (S&P 500) at 16.4% year to date.

 

Fund Performance

The Reitway BCI Global Property Feeder Fund lost 4.71% in USD terms, outperforming our benchmark by ~1.5%. Our overweight exposure and stock selection in the Specialized sector l and our underweight to Office REITs contributed to our excess performance during the month. We remain pleased with the absolute and relative returns we have delivered over the longer time-periods and are encouraged by our improved relative performance over the shorter-term, 1-year figure.

2022 Slide updates July

Actual annual figures are available to the investor on request

REIT Resiliency

Real Estate continues to show its resilience, with Funds from Operations (FFO) reaching, and now exceeding pre-pandemic levels.

All sectors were materially impacted by the pandemic, except for industrial which grew their FFO. This was related to the rapid acceleration of e-commerce. Data Centers and Self-Storage too did not see a negative impact, driven again by e-commerce, lock-downs and WFH as well as, for Self-Storage, the disruption that the pandemic caused.

While the above chart reflects all US Equity REITs, it will represent the outcomes of these sectors globally. The US represents ~69% of our current portfolio and ~65% on average. As can be seen from this chart, all sectors, barring one (Health Care) have surpassed their pre-pandemic levels.

There has been a 9.8% increase in FFO since Q1 and 84% of REITs have reported growth year-on-year.

Outlook

We remain steadfast in our belief that the asset class can post meaningful returns relative to stocks and bonds, even against a slower-growth, higher-inflation backdrop, particularly as valuations remain attractive.

Leverage levels of REITs and Real Estate are at all-time lows, as they have trended downwards significantly since 2007/2008. Coupled with this, their interest expenses are at all-time lows, so they remain well positioned as interest rates are increasing.

As of August 2022, our portfolio forward yield is over 3% and our constituents are expected to deliver high single digit dividend growth per year for the next three years. Additionally, the discounts to NAV are currently at very appealing levels.

Through our active portfolio management, our focus remains on constructing a diversified portfolio that outperforms not only in rising markets, but also during periods of market stress.

 
For more information on any of our funds please contact oliviat@reitwayglobal.com or on 082 676 6115 

 

Disclaimer

Although all precautions have been made to ensure the reliability of data and information contained in this presentation, Reitway cannot guarantee the reliability thereof. Past performance referred to in this presentation is not necessarily indicative of future performance. Similarly, forecasts contained in this presentation involve risks and uncertainties which may result in future performance, outcomes and results which differ materially from such forecasts. You are accordingly cautioned not to place undue reliance on any historical data, general information or forecasts used in this presentation.

Reitway accepts no liability whatsoever for any loss, damage (direct or consequential) or expense suffered by a recipient as a result of any reliance placed on any information contained in this presentation or any opinions expressed during this presentation. The views, opinions and comments reflected in the presentation represent those of Reitway, associated companies and employees.

Reitway Global (Pty) Ltd

Registration No: 2011/125542/07. A Financial Services Provider licensed under the Financial Advisory and Intermediary Services Act, 37 of 2002. FSP license No: 43747

 

Boutique Collective Investments (RF) (Pty) Ltd (“BCI”) is a registered Manager of the Boutique Collective Investments Scheme, approved in terms of the Collective Investments Schemes Control Act, No 45 of 2002 and is a full member of the Association for Savings and Investment SA. 

Collective Investment Schemes in securities are generally medium to long term investments. The value of participatory interests may go up or down and past performance is not necessarily an indication of future performance.  The Manager does not guarantee the capital or the return of a portfolio. Collective Investments are traded at ruling prices and can engage in borrowing and scrip lending.  A schedule of fees, charges and maximum commissions is available on request.  BCI reserves the right to close the portfolio to new investors and reopen certain portfolios from time to time in order to manage them more efficiently.  Additional information, including application forms, annual or quarterly reports can be obtained from BCI, free of charge.

Performance figures quoted for the portfolio is from MoneyMate, as at the date of this document for a lump sum investment, using NAV-NAV with income reinvested and do not take any upfront manager’s  charge into account.  Income distributions are declared on the ex-dividend date.  Actual investment performance will differ based on the initial fees charge applicable, the actual investment date, the date of reinvestment and dividend withholding tax.

Investments in foreign securities may include additional risks such as potential constraints on liquidity and  repatriation of funds, macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of market information.

Boutique Collective Investments (RF) Pty Ltd retains full legal responsibility for the third party named portfolio.

Although reasonable steps have been taken to ensure the validity and accuracy of the information in this document, BCI does not accept any responsibility for any claim, damages, loss or expense, however it arises, out of or in connection with the information in this document, whether by a client, investor or intermediary.  This document should not be seen as an offer to purchase any specific product and is not to be construed as advice or guidance in any form whatsoever.  Investors are encouraged to obtain independent professional investment and taxation advice before investing with or in any of BCI/the Manager’s products.

Access the BCI Privacy Policy and the BCI Terms and Conditions on the BCI website (www.bcis.co.za).

A feeder fund, that a feeder fund is a portfolio that invests in a single portfolio of a collective investment scheme, which levies its own charges and which could result in a higher fee structure for the feeder fund.

REITWAY GLOBAL (Pty) Ltd

Registration No: 2011/125542/07. A Financial Services Provider licensed under the Financial Advisory and Intermediary Services Act, 37 of 2002. FSP license No: 43747

The full details and basis of the awards are available from the manager