Image: 447 Collins Street, Melbourne.
FY2021 Highlights
Performance
- The Fund recorded a Net Total Return of 5.76% over one year and 7.85% over five years at 30 June 2021.
- During FY2021, the Fund grew $0.84B to $16.82B, including acquisition settlements of $25.86M for 447 Collins St, Melbourne VIC.
- Arrears have been trending down over FY2021 through a combination of rent relief measures to customers and increased rent collections. Collections were up for the 12 months to 30 June, with 91% of June 2021 billings collected from 100% owned properties.
Q2 2021 Valuations
- On aggregate, independent valuations for Q2 2021 increased with a total direct property portfolio (excluding unit trust interests) value of $15.62B. This reflected an increase of $235.29M (after development and capital expenditure) from the valuations recorded in Q1 2021.
Key drivers of valuation
Commercial: Increased by $91.0M after capital expenditure (+1.05%). Property-level movement after capital expenditure generally ranged between -2.63% and +3.83% excluding outliers. Movement has been attributed to selected firming of capitalisation rates and discount rates throughout the portfolio, whilst market rental growth assumptions remain largely consistent with prior quarters, combined with assumptions of declining incentives over a 10-year investment horizon.
Retail: Decreased by $10.74M after capital expenditure (-0.22%) primarily due to valuers continuing to take a conservative approach to the sustainability of retail rental income, with the CBD Retail and Regional assets experiencing the greatest valuation declines. This is driven by the slower-than-expected return of workers to CBD locations, reduction in interstate and international tourism and a softening in market rents, particularly across regional centres with a high exposure to discretionary retail.
Logistics & warehousing: Increased by $151.06M after capital expenditure (+11.76%) driven by further capitalisation rate compression and increased land value rates.
Education: Increased $3.56M after capital expenditure (+1.17%), which is largely attributable to valuation movement within the VU Tower development within the June quarter.
The Fund’s investment in units trusts increased by $37.81M, primarily as a result of an increase in the book value of the Pellicano property trusts’ by $37.41M.
Unlisted property assets are a source of stability and great long-term returns for REI Super’s portfolio.
Approximately 60% of REI Super’s property portfolio within Balanced is invested in unlisted property assets, through one of our long-standing investment managers, Industry Super Property Trust (ISPT).
Unlisted property assets are assets that are not listed on the Australian stock exchange and are generally not readily available to individual investors.
Unlisted property investments are excellent long-term investments, providing a combination of growth and income to REI Super’s portfolio. They also have fewer short-term ups and downs in their returns than many investments.
REI Super’s investments in ISPT are through its Core Fund, which is a diverse portfolio of around 75 Australian commercial, industrial and retail properties across capital cities and regional centres.
Since inception in 1994 the ISPT Core Fund has achieved a total gross return as at 30 June 2021 of 9.49% p.a.
The portfolio includes many iconic Australian properties:
Future investment performance can vary from past performance, and you should not base your decision to invest in REI Super simply on past performance. Past earning rates are not an indicator of future earning rates. The investment returns of REI Super are not guaranteed, and the value of the investment may rise or fall.
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The information contained in this article does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129. July 2021.