Changing face of A-REITs property sector under the microscopeWednesday 12th December 2007 | 2:31 PM« Back to ListingAustralia’s real estate investment trusts (A-REITs) sector has undergone considerable change and is continuing to experience strong growth, with assets under management increasing 29% over the past year to reach $356 billion in 2007. Property Investment Research (PIR) today released the 13th edition of its A-REITs Review for 2007, predicting further growth for the Australian listed and unlisted A-REITs sector that is likely to see total assets exceed $500 billion within two years. The comprehensive report has for the first time provided independent long-term investment ratings on 32 listed A-REITs researched by PIR, including a number of international trusts with property assets invested outside of Australia in the US, Europe and Asia. Westfield Group, with investment interests in 121 shopping centres in Australia, New Zealand, the United Kingdom and the US with assets under management in excess of $62 billion, achieved the highest investment rating of the coverage universe at AA+. A further four trusts achieved still-strong AA ratings, with nine achieving AA-, 11 A+, four A and two A- (while Centro Shopping America’s rating was withdrawn due to the merger with Centro Retail Group during production). A detailed explanation of PIR’s ratings and ratings processes is contained within the review. Commenting on the report, PIR managing director Richard Cruickshank, said the Australian REITs industry had continued to grow at compound annual growth rate exceeding 20%, with institutional allocations from superannuation and investment funds still holding around 8%-10%. “PIR believes there is a strong case for a 15%-20% allocation,” Mr Cruickshank said. “However, this would require industry participants to row in the same direction and send a consistent message to investors and investment managers.” Australia’s top 10 fund managers collectively control 57% of the overall REITs industry with Westfield controlling almost 14% on its own. That top 10 is collectively responsible for real estate assets totalling $203.5 billion, an increase of 27% on last year’s figure of $159.7 billion. Mr Cruickshank said Australia remained the most securitised property market in the world, with about 70% of listed and unlisted property assets already securitised. “On the global property investment market only 15% (US$2.6 trillion) of investment grade commercial property is owned by property funds and REITS, so rocket science is not required to determine where the future opportunities may lie,” he said. “PIR’s 10-year forecast is for the global REITs (listed and unlisted) market to grow by 400% by 2017 to total assets of US$13 trillion, which would still only represent 30% of global investment grade commercial real estate.” Australia’s listed REITs sector increased assets under management by 23% over the past year to reach $175 billion, but this growth was overshadowed by the unlisted REITs – retail sector, which from a small base has grown at an annual rate of 30% per annum since 2001. Unlisted retail funds grew funds under management by 67%, while direct property syndicates grew FUM by 7.5% and strata title schemes reduced FUM by 28%. “This clearly indicates the continuation of the swing towards unlisted retail funds, away from syndicates, that has been increasingly prevalent for the past three years,” Mr Cruickshank said. “PIR anticipates that this year, the total FUM in unlisted retail funds will, for the first time in this cycle, be larger than direct property syndicates, given the focus on the former by managers.” Press release by Seeking Media www.seekingmedia.com.au |
