The ASX 200 AREIT Accumulation index rose by 1.06% over the
quarter ending 30 September 2014.
ASX200 AREIT Accumulation
Overall, the sector recorded earnings per share growth of 5.8%
over FY14. Debt to total assets for the sector increased from 29%
to 32%, mainly due to the restructure of Westfield Retail Trust
(22% gearing) into Scentre Group (37% gearing). Net tangible assets
for the sector grew by 3.3%.
The outlook for key property sectors is as
The Office sector experienced net operating income growth of
0.1% for FY14.
Data compiled in July 2014 confirm CBD office vacancy rate
increases in Brisbane (14.2% of floor space) and Perth (11.8%).
Sydney (8.4%) and Melbourne recorded a modest improvement
The downturn in the resources sector is impacting office demand
in Perth and Brisbane.
New supply becoming available in Sydney and Melbourne will
continue to put downward pressure on rents. Nevertheless, demand
for yield and from overseas investors has driven office property
Some of the excess supply will be absorbed by the developing
trend of converting non-performing office space to residential
(especially in Sydney and Melbourne).
The Retail sector experienced net operating income growth of
2.0% for FY14.
Occupancy rates across the retail AREIT's remain very high
Low interest rates, surging house prices and moderately strong
credit growth remains supportive of the retail sector.
The Industrial sector experienced net operating income growth
of 1.8% for FY14.
Occupancy across the AREIT sector remained above 96%.
In NSW industrial property supply has outweighed demand since
2010. Recent completion of new developments has lifted available
space to a 15 month high.
Available space in Melbourne is at a 5 year high.
Extremely low vacancy rates in the Brisbane market in 2012
prompted a strong supply response over the last 2 years. Available
space is now at a record high and will take some time to be
AREITs exposed to residential property and construction have
benefited from the low interest rate environment, which has
Developers such as Mirvac and Stockland have reported strong
growth from their residential divisions.
The outlook for the sector is mixed. AREITs exposed to
residential property and an improving retail environment should
continue to perform reasonably well, at least in the short run. A
supply imbalance means that AREIT's exposed to the office and
industrial sectors will find conditions more subdued.
Notwithstanding, those AREITs that have reasonably long weighted
average lease expiries will continue to deliver sound income
returns for investors. On balance we recommend investors retain a
modest underweight exposure.
An actuarial review of the Invensys Australia Superannuation Fund showed it to be in surplus to the tune of $189.2 million. In mid 2003, the Invensys Group proposed to the trustee that the surplus be repatriated to the principal employer in the group.
CIVs will have flow-through status for tax purposes and similar criteria as the MITs, to encourage foreign investment.
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