This article is from the Australian Property Journal archive
AUSTRALIAN real estate investments trusts are working their way up to a heavier weight division.
According to the Australian Securities Exchange’s monthly Listed Managed Investment report, the market capitalisation of AREITs increased to $4 billion in April to $80 billion, from $76 billion in March.
The market cap is now 58.3% higher when compared to the low value of $50 billion in April last year, during the global financial crisis. However the sector remains 51.2% lower than the April 2008 value of $103 billion.
Activity in AREITs has also steadily picked up, in February the 12 month average trade value was $7.18 billion; in March it rose to $7.57 billion; and in April the trade value was $7.82 billion. This is well up from the same period last year where the 12 month average was $6.64 billion.
The latest figure confirms that the AREITs sector is regaining favour with investors, which is also resulting in the gap between net tangible asset and share price closing further.
The latest REIT Monitor by chartered accounting and business advisory firm, PKF, found that this is due to AREITs de-risking their portfolio which has led to improvements in the key metric of price discount to NTA across the entire sector.
This de-risking has led to an average discounted price to NTA at December 31, 2009 of 25%, compared to 54% six months earlier.
Meanwhile Global Property Research’s latest April 2010 update shows AREITs local returns for April was 3.6%; over the past six months it was 6.5% and in the year to date it was 2.1%.
This is a big improvement from GPR’s April 2009 report which showed the local return for six months was -28% and 12 months was -18.8%.
Australian Property Journal
