We generally look at the REITs together, given high levels of similarity once you control for sector.


Whilst the guided FFO for FY23 have been generally weaker, across the sector, as interest costs rise, the broader story of revenue recovery, higher occupancy, and positive rental renewal / leasing outcomes has surprised on the upside.

Same with retention rates.

Overall, pretty good. Landlords are in good shape, with the possible exception of lower quality office.

The issue of cap rates, however, remains. Very unlikely that anyone saw cap rate compression, despite what they say, given bond yields nigh on doubled over the past year, and given residential property prices (which commercial correlates to) are in decline.

We recently sold down one of our key REIT exposures (VCX) after a period of very strong relative performance.

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Please note that past performance is not a reliable indicator of future performance.

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