Assessing the foundations in the property market and the Antares Listed Property fund

Funds Management

by Carolyn Herbert

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Transcription of Finance News Network Interview with Antares Listed Property Fund Portfolio Manager, Brett McNeill
Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from the Antares Listed Property Fund is Portfolio Manager, Brett McNeill. Brett, welcome back.
Brett McNeill: Thanks very much.
Carolyn Herbert: Can you start by giving us an introduction to the Fund and its objective?
Brett McNeill: The Antares Listed Property Fund has a key objective of delivering investors, a good stable growing income return. And it aims to do that and also deliver some growth, by investing in a diversified portfolio of listed real estate securities. So as well as the income and the growth objectives of the Fund, some of the other key aims and objectives are to provide investors with full liquidity. And that’s done only by investing in listed securities and also, to give investors good diversification benefits as well.
And the diversification really comes through the type of asset class that listed real estate, listed property, is in that it sits nicely between bonds and equities, in a diversified portfolio. So in terms of the actual investment mandate for the Fund, it’s to outperform the Australian Listed Property Index over the long term.
Carolyn Herbert:So Brett, What’s the investment approach?
Brett McNeill: In aiming to deliver our objective to investors, we focus on fundamental research. That’s a key feature of our firm, so doing our own research from a bottom-up perspective. So looking at all the stock specific factors and we do that, in what we think is a very rigorous and disciplined manner. Because what we’re essentially trying to do, is invest in a portfolio of what we think are the highest quality, and the most undervalued listed property stocks.And we do all of that in what’s a very selectively contrarian approach, we term it, where we’re often taking positions different to the rest of the market.
Carolyn Herbert: How did the listed property market perform compared to that of the broader share market?
Brett McNeill: The Australian Listed Property sector’s had a fantastic run. So over the last five years, it’s delivered a total return of 16 per cent per annum. And that’s been well ahead of the broader share market, which has returned about six per cent, over the same timeframe. I’d also stress that the great performance of the listed property sector - that 16 per cent return over the last five years is well above what we consider, to be a normal through the cycle return for the sector. So it’s certainly had a great run.
Carolyn Herbert:Brett, Turning to performance now. How’s the Fund performed over the medium to long term?
Brett McNeill: The Fund’s delivered on its objectives, certainly over the long term. So if we look at the last 10 years, and the Fund’s got a track record of even longer than that, but over the last 10 years the Fund’s outperformed the sector, meeting its objective. It’s delivered a total net return of fees of about 4.5 per cent per annum, which is almost a couple of per cent ahead of the benchmark over that time, which has certainly been pleasing.
Carolyn Herbert:And Brett, Which stocks have been your best performers?
Brett McNeill: We’ve had a lot of different contributors to the performance of the Fund over the long term. So it certainly hasn’t been just one stock, or one sector that’s had a really strong positive contribution; it’s been fairly broad based. So names like Goodman Group (ASX:GMG), which is a global manager owner and developer of industrial real estate, has performed extremely well over the last five years for the Fund.
Westfield Corporation Limited (ASX:WFD) similarly, as well as some small cap stocks. And most recently, Carindale Property Trust (ASX:CDP) has been a really good performer for the Fund. And that’s just a very simple structure, a real old-fashioned property trust that was trading at a big discount, to its valuation. And that’s closed a lot in the last quarter, which has been great.
And another small cap property stock that’s performed extremely well for us, has been Asia Pacific Data Centre Group (ASX:AJD) REIT, which was Australia’s first data centre REIT. Very simple, clean structure, strong balance sheet, good governance levels and that IPOed at a priceof $1.00, back in 2012 and it’s currently trading at $1.40. So a nice return over the time period, but it still offers a very attractive yield, which we’re very confident can grow over time.
Carolyn Herbert: Finally Brett, what’s your outlook for the property sector for the next six months?
Brett McNeill: The main thing for the sector we think, certainly in the short to medium term will be just to consolidate its position, particularly after the great run that it’s had. We’re very confident on the fundamentals of the sector. All the key factors we look at, the balance sheets, payout ratios, structures, governance levels, all really sound. The only caveat on it I guess is the valuations, and after such a strong run of performance over the last five years, we just think the sector is fully valued now it’s certainly not cheap anymore.
Carolyn Herbert: Brett McNeill, thanks for the update on the Antares Listed Property Fund.
Brett McNeill: Thank you very much.