J-REITs Were Best-Performing In Asiapac In September As Hotel Sector Climbed
Singapore’s Frasers Hospitality slumped 33.3% after privatisation plans failed.
By Patrick Ma, Director, Listed Products and Research, Admiral Investments
Oct 5, 2022 – Japan’s REITs were the best-performing in the Asia Pacific in September while Australian REITs tanked. The worst-performing REIT for the month was Singapore’s Frasers Hospitality Trust which fell 33.3%
Despite the wave of interest rate hikes by other countries, the Bank of Japan maintained its loose monetary policy. Japan also announced plans to further open the country to tourism, which supported travel-related sectors.
Therefore, it was not surprising that the best-performing REIT for the month was Invincible Investment Corporation, which rose 1.8%. Hotel assets make up about 90% of the REIT’s portfolio. Other hotel REITs that performed well included Ichigo Hotel REIT, which climbed 0.5% and Japan Hotel REIT Investment that rose 0.4%.
J-REITs, as measured by the GPR APREA Investable REIT Japan, fell 8.3%, outperforming the MSCI Japan index, which dropped 10.2%.
Singapore’s Frasers Hospitality Trust unit price fell sharply after a S$1.35 billion (US$966.49 million) proposal to take the trust private failed to garner the required shareholder approval.
Frasers Property Ltd, part of Thai tycoon Charoen Sirivadhanabhakdi’s TCC Group, had offered to buy out the rest of the stake in the trust it does not already own at S$0.70 per share.
Overall, Singapore REITs fell 9.9%, compared to the region’s equities 5.3% drop.
Among the worst performers were also Australian REITs with HealthCo Healthcare and Wellness REIT down 25.6% and the Goodman Group falling -24.8%.
Globally, markets were pummelled by rising interest rates. The US Federal Reserve raised its policy rate another 75 bps to 3%-3.25%, the highest it had been since early 2008. Other central banks followed suit, which put downward pressure on global equities and REITs.
US inflation rate reached 8.2% in August, above market expectations and fuelled projections for further interest rate hikes. The month of September also saw US treasury yields and the US dollar reaching new highs. Most countries’ REIT markets underperformed their respective equity market, with the exception of Japan’s REIT market.
Outside of the Asia Pacific, the UK was the worst performing REIT market, affected by the new Conservative administration’s fiscal policies and the resulting volatility in the UK gilts and its currency.
|REIT Index||Performance||Corresponding equity index||Performance|
|Sep 2022||YTD-2022||Sep 2022||YTD-2022|
|GPR 250 REIT Index||-12.2%||-28.6%||MSCI WORLD||-9.3%||-25.1%|
|GPR Aprea Investable REIT 100 Index||-11.9%||-25.5%||MSCI AC ASIA PACIFIC||-12.4%||-29.9%|
|GPR Aprea Investable REIT Australia||-17.2%||-31.9%||MSCI Australia||-11.6%||-18.0%|
|GPR Aprea Investable REIT Japan||-8.3%||-22.9%||MSCI Japan||-10.2%||-26.1%|
|GPR Aprea Investable REIT Singapore||-9.9%||-15.5%||MSCI Singapore||-5.3%||-19.4%|
|GPR Aprea Composite REIT Index Hong Kong||-12.3%||-24.6%||MSCI Hong Kong||-10.7%||-19.4%|
|GPR 250 REIT United States Index||-11.9%||-28.2%||MSCI USA||-9.3%||-24.8%|
|GPR 250 REIT United Kingdom Index||-21.6%||-48.0%||MSCI UK||-8.8%||-18.6%|
|Based on market close at September 30, 2022|
|All performance numbers are based on total gross returns in USD|
|Sources: GPR and Bloomberg|
With contribution from Jeroen Vreeker, Global Property Research.
Read also: AsiaPac REITs follow regional equities down 11.8% in September