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Market | Portfolio update

Up and down in the markets prevail– incoming data keep markets in motion – REITs hold up quite well

By March 10, 2023No Comments

Monthly Briefing
Market | Portfolio update

02 | 2023

Investors took a more defensive stance in February.

REITS Performance 02-2023

After being very positive within the first weeks of February, unexpected strong US job figures, higher than expected inflation rates, raised the prospect “higher rates for longer”. Therefore, global stock markets fell back at the end of the month. In addition, there are growing concerns about a price-wage spiral in view of the high wage demands of the trade unions. Despite these obstacles, Europe managed again to be the best market with a plus of +1.94 percent. But the other two major regions couldn’t escape the headwind and closed in negative territory. North America came in with -0.07 percent followed by Asia (Nikkei) with -1.31 percent (all figures in EUR).

This not so positive momentum was also reflected by the global REIT markets. As on the broader equity markets only Europe managed to stay in positive territory with a gain of+1.03 percent, followed by Asia with -1.92 percent. North America was last with       -2,36 percent. Overall, the EPRA Global REIT Index decreased -2.02 percent last month (all figures in EUR). The UK REIT index was up +0.42 percent last month and is now roundabout 120 basis points behind the European REIT index.

Our model portfolio closed last month only with a small decrease. With a performance of -0,33 percent for February, it outperformed the Global REIT Index significantly again. In addition, the model portfolio was able to achieve a dividend yield of +0.99 per cent (gross without withholding tax) for the first two months of 2023.

Sectoral performance

Only two sectors in the REIT market ended the second month of 2023 in positive territory. These two best performing sectors were self-storage with +3.92 percent and specialty (towers etc.) with +0.65 percent. Self-storage gained after rental numbers came in better than expected. Main driver has been the high demand for small spaces by small and medium enterprises. Specialty was sought after because investors still see growing demand for infrastructure like towers, powerlines etc.. That should produce further rental and income growth for the next couple of months as supply is significantly below demand.

Worst performing sectors last month were lodging/resorts and offices, both with -5.28 percent. For lodging/resorts it was only profit taking after two months of outperformance, where for offices it is a more structural problem. Rents for higher quality offices came back to pre covid levels, but growth is negligible. Additionally, demand for lower-tier properties is shrinking and vacancy is rising. Due to this uncertain picture performance of office REITs is under pressure and will further rise, with the exemption of companies which own or develop higher quality and green premises.


Data driven volatility in the markets will go on for the coming months. Inflation will remain stubbornly high and the path for interest rates is still upwards. We expect to see a clearer picture in the second half of the year. Share prices at already lofty levels don’t leave much room for further significant increases in the near future. In this context, phases of weaker share prices must be expected again. So, it is all about incoming economic data and figures and how the central banks will adjust the speed and magnitude of further rate hikes accordingly.

Therefore, at the current stage, we stick to our conservative allocation with an overweight in sectors like data center and healthcare. They are supporting longer term structural changes and with their long-term leases they provide the basis for stable dividends in the coming months. Additionally, green buildings may be resilient, as higher building costs slow new developments in times of rising demand.

Actually, the beneficial financial situation of the REITs, indexation of rents and already published results make us confident that our forecast of a dividend yield of 5.5 to 6.0 percent for 2023 will be reached.

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

DeA Capital Real Estate Germany GmbH is authorised in the context of investment brokerage of and investment advice in financial instruments pursuant to § 2 para. 2 No. 3 and No. 4 of the Securities Institutions Act ("WpIG") as a contractually bound intermediary pursuant to § 3 para. 2 WpIG acts exclusively for the account and under the liability of AHP Capital Management GmbH, Weißfrauenstraße 12-16, 60311 Frankfurt am Main, (“AHP”). Further information on the investment services offered can be found here.