FOLKESTONE MAXIM A-REIT SECURITIES FUND
KEY STATISTICS
as at 31 May 2015
MAY 2015 REPORT
MARKET REVIEW
Global equity markets ended the month of
May mixed, with the US market
outperforming
as
emerging
markets
comprehensively underperformed. Investors
were speculating on the timing of the US
Federal Reserve’s upward interest move, as
well as the outcome of negotiations between
Greece and its creditors, as they tried to
forestall an interest payment default. The
S&P500 Index ended the month at a record
high.
In Australia the equity market underperformed its developed market peers
driven by the underperformance of banks,
as Westpac and NAB announced equity
raisings in the face of growing regulatory
pressure for the banks to strengthen their
capital ratios.
2.7% and outperforming the broader equity
market by 2.4%.
Over the 12 month period ended 31 May
2015,
the
S&P/ASX
300
A-REIT
Accumulation Index has returned +29.3%,
outperforming the broader market’s return of
9.9% by 19.4%.
The gap between best to worst performing
stock in the S&P/ASX 300 A-REIT Index in
May was 15.5%, with the best performing
stocks being BWP Trust (BWP +8.9%)
followed by Dexus Property Group (DXS
+8.5%) and Investa Office Fund (IOF
+6.7%). The three worst performers were
Charter Hall Group (CHC -6.6%), 360
Capital Industrial Fund (TIX -4.3%) and
Hotel Property Investments (HPI -4.1%).
ACTIVITY
Following its monthly Board Meeting, the
Reserve Bank of Australia (RBA) cut the
cash rate by 0.25% to 2.0%. The yield on 90
Day Bank Bills fell 10 basis points to 2.14%
and the 10 year bond yield rose 7 basis
points to 2.67%, whilst the Aussie Dollar fell
2.5 cents to US$0.7646.
The S&P/ASX 300 A-REIT Accumulation
Index moved higher, ending the month up
Status
Open
Fund Maturity
Open Ended
Investments
Primarily A-REITS
Investment Horizon
3-5 years
Distribution Frequency
Quarterly
Fund Inception Date
October 2005
Pricing
Daily
Buy/Sell Spread
0.25%/0.25%
Total MER
0.95% up to $50m
Then
0.85% > $50m
ARSN
116 193 563
APIR Code
COL0001AU
PLATFORMS
Macquarie Wrap Solutions
Netwealth
Powerwrap
Symetry
HUB24
Activity
in
May
included
Mirvac’s
announcement that it had exchanged
contracts for the sale of 210-220 George
Street, Sydney to Anton Capital for $99m,
reflecting a yield of 7%.
Aqualand Australia, a Chinese backed
property group, bought the No. 8 REVY site
at Darling Island and the adjoining Chanel
Seven Headquarters in Pyrmont for a total
Fund Performance to 31 May 2015
Folkestone Maxim A-REIT
Securities Fund
May 2015
%
3 Months
%
1 Year
% p.a.
3 Years
% p.a.
5 Years
% p.a.
7 Years
% p.a.
Since Inception
% p.a.*
Growth
+1.93
-0.03
+22.70
+15.48
+9.83
+0.03
-0.62
Income Return
+0.00
+0.72
+4.90
+5.58
+5.09
+3.06
+3.97
Total Return (After Fees but Before Tax)**
+1.93
+0.69
+27.60
+21.06
+14.92
+3.09
+3.35
S&P/ASX 300 A-REIT Accumulation Index
+2.73
-0.29
+29.34
+21.61
+14.92
+3.26
+2.49
Value Add
-0.80
+0.98
-1.74
-0.55
+0.00
-0.17
+0.86
*Fund inception date October 2005. **Please note the Fund’s management fee was reduced on 16 May 2014. The Fund’s after fees but before tax performance only reflects the new management fee from this date.
ACTIVITY CONT’D
outlay of $180m. The REVY site is
expected
to
be
redeveloped
into
apartments.
Charter Hall Group (CHC) raised $225
million via an institutional placement and a
$10 million share purchase plan to coinvest in a number of their funds and
increase its capacity for future acquisitions.
In corporate activity, the merger of
Federation Centres and Novion Property
Group (NVN) received approval from both
NVN securityholders and the Supreme
Court. The implementation date is 12 June.
Securityholders in Australian Industrial
REIT (ANI) rejected the proposal for 360
Capital to replace the RE of ANI. The 360
Capital Industrial Fund (TIX) extended its
takeover bid for ANI to 3 June 2015.
SECTOR VALUATION
As at 31 May 2015, the A-REIT sector was
trading at FY16 DPS yield of 5.0%,
representing a 286 basis points premium to
90 Bank Bills and a 233 basis points
premium to 10 year bonds.
OUTLOOK
Having regard to the reduced cash rate as
well as the prospect of rates staying lower
for longer, the A-REIT sector continues to
offer attractive distributions, providing
appeal for investors seeking yield.
An additional attraction for the sector
includes the prospect for the A-REITs to
deliver higher property values from a
further compression of cap rates in
August when releasing their 2015 full year
results.
ASSET ALLOCATION
As at 31 May 2015
FUND PERFORMANCE
In May, the Fund returned +1.93% (on an
after fee but before tax basis), compared to
the Fund’s Benchmark which returned
2.73%. Over the 3 month period ended 31
May 2015, the Fund has returned +0.69%
outperforming the Benchmark return of
-0.29% by 0.98%. For the 12 month period
ended 31 May 2015, the Fund has returned
+27.60% underperforming the Benchmark
return of +29.34% by 1.74%. Since
inception (15 October 2005), the Fund has
outperformed its Benchmark by 0.86% on
an after fees but before tax basis.
Positive contributions to returns over May
came from the Fund’s exposure to the GPT
Metropolitan Fund (GMF +3.9%), Carindale
Property
Trust
(CDP
+1.2%)
and
underweight exposure to Novion (NVM)
which fell 1.2%. Detracting from returns
were exposure to Rural Funds (RFF – 4.4%)
as well as underweight exposures to
SCentre Group (SCG +5.6%) and Investa
Office Fund (IOF +6.7%).
The Fund’s investments comprised 16 ASX
listed securities totaling 94.7% of the
portfolio, of which 11 are constituents of the
S&P/ASX 300 A-REIT Index, with the
remaining 5 held outside of the Benchmark
Index. A 0.7% exposure is held in an
unlisted fund which will be exited in due
course. The balance of 4.6% of the portfolio
was held in cash/liquid investments.
S&P/ASX 300 A-REIT - 78.6%
Ex S&P/ASX 300 A-REIT - 11.0%
Real Estate Managers & Developers - 5.1%
Cash - 4.6%
Unlisted - 0.7%
SECTOR SPLIT
As at 31 May 2015
Social Infrastructure A-REIT - 6.0%
Industrial A-REIT - 11.9%
Retail A-REIT - 37.1%
Diversified A-REIT - 19.9%
Office A-REIT - 10.2%
Other A-REIT - 5.1%
Real Estate Managers & Developers - 4.5%
Cash - 4.6%
Unlisted - 0.7%
Please note: Numbers in the graphs may not add
up to 100 due to rounding.
Folkestone Maxim Asset
Management Ltd
ACN 104 512 978 AFSL 238349
Sydney Office
Level 10, 60 Carrington Street
Sydney NSW 2000
Melbourne Office
Level 12, 15 William Street
Melbourne VIC 3000
e: [email protected]
www.folkestone.com.au
t: +61 2 8667 2800
f: +61 2 8667 2880
t: +61 3 8601 2092
f: +61 3 9200 2282