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Market | Portfolio update

Second half of the year started impressive – REITs maintain their lead against broader equities.

By August 9, 2022September 8th, 2022No Comments

Monthly Briefing
Market | Portfolio update

07 | 2022

In July stocks all over the world rebounded after months of discomfort due to several things like inflation and central banks monetary tightening.


Until mid-July, the shaky development of recent months on the stock markets continued. After the ECB’s first rate hike and a further rate hike in the US in the second half of July, a market recovery began. The economic slowdown to the point of an impending recession thus led to a significant reduction in expectations for future interest rate hikes. This, together with the predominantly good quarterly and semi-annual reports of many companies, triggered a significant price increase on the stock exchanges towards the end of the month. Led by the S&P 500 with a plus of +12.28 percent, the Nikkei followed almost equally with +10.22 percent. The Eurostoxx 50 Index ended again at the third place with +7.47 percent (all figures in EUR).

Global REIT markets have performed more or less in line or even better as the broader equity markets last month. Best region again was North America with an increase of +11.99 percent, followed by Europe with +11.70 percent. Asia came in last with +8.31 percent as concerns about rising tensions in this region burdened on market sentiment. Overall, the EPRA Global REIT Index increased +11.47 percent last month (all figures in EUR). The UK REIT index was up +11.90 percent last month and is now still roundabout 200 basis points behind the European REIT index so far this year.

Our model portfolio, which strategy is also followed by our “QSF-DeA Global REITs” fund, closed July with a gain of +11.10 percent. This results in a performance for the year of -5.33 percent, which is not far behind the performance of the global REIT index which is at -3.36 percent. In addition, it was able to achieve a dividend yield of +4.52 per cent (gross without withholding tax) so far this year.

In July, all sectors showed positive performance, led again by specialty (Infrastructure etc.). Second best was mixed used office/industrial which have been worst hit the month before. At the lower end we saw last month’s star healthcare and the sector diversified, but both with high single digit gains as well. The main reason for healthcare was, that market participants did some rebalancing within their portfolios. Specialty REITs expansion plans continued and therefore earnings growth will further increase what led to its good performance last month.

Office REITs disclosed better than expected occupancies and therefore better rental income, so that the extent of how much asset prices may fall has been overestimated a little bit.

The timeline and path to a recovery in retail REITs’ earnings is varying by subsector and stretching beyond 2022, even though occupancy has already recovered. Demand could weaken and store closings may pick up given the economic backdrop. Food related retail REITs appear poised for stronger rent growth in 2H and 2023 than their mall REIT peers.

Interest-rate hikes have a limited effect on REIT debt costs because loans are fixed or fully hedged, The interest coverage was tested when rents weren’t paid during the pandemic but has since recovered and ratios lie substantially above the 1.25-1.75x required by typical debt covenants. And most REITs are an inflation hedge as their rental contracts typically contain inflation indexation clauses. For that reason, we still prefer the more conservative sectors Industrial, data center and healthcare as they typically have long-term inflation linked rental contracts which should provide protection in the short-term as well.

The slower growth indicated by some available economic data, led to rising assumptions that central bank’s  interest rate hike course may expire at the end of this year. This will support equity markets but nevertheless growth this year will be lower than expected.

With more more than 4.5 percent collected dividend yield so far, we have met our forecast of a dividend yield of 4.0 to 5.0 percent for the whole year 2022 and are confident to reach the upper band of our forecast as well. Other factors like high inflation, the higher interest rates and the lower economic growth will last for the rest of the year. But currently we still believe that the total return for 2022 should be positive overall.

For more information about our DeA Global REIT’s fund, performance, opportunities and investment opportunities, please contact us or visit

Your contact persons

Wolfgang Speckhahn

Dr. Wolfgang Speckhahn

Managing Director
+49 173 1811 135

Thorsten Schilling

Dr. Thorsten Schilling

Director Portfolio Management
+49 69 50602 6700