ARTICLE · 21 OCTOBER 2014

Australian real estate investment trusts (AREITS)

Moore Australia

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On balance, the outlook for the sector is mixed, so we recommend that investors retain a modest underweight exposure.

AustraliaStrategy

Haris Argeetes

James Totonjian

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Overview

The ASX 200 AREIT Accumulation index rose by 1.06% over the quarter ending 30 September 2014.

ASX200 AREIT Accumulation Index

Outlook

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 follows:

Office

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 (8.7%).

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