The FY21 financial year saw significant changes in the Australian listed REITs with major acquisitions, growth in valuations and a number of mergers & acquisitions driving the market.
Our review of the annual results published by the industry over the past 3 weeks has revealed that the total value of assets under management (AUM) by listed groups grew 12% (+$42bn) in FY2021 to $372bn with Charter Hall, Dexus and Centuria leading the charge.
Dexus and Centuria were the most active in the merger & acquisition space with the takeover of the APN Property Group and the AMP Capital Diversified Fund adding $8.5bn to Dexus and the takeover of Primewest Group adding $5.2bn to Centuria. These transactions moved $14bn in assets into the hands of the top listed managers, of which $8bn was previously in listed hands.
Acquisitions added $15bn in total funds to the listed managers, with Charter Hall accounting for approximately 40% of this number. Charter Halls’ major acquisitions including the $682m investment in the Ampol Convenience Fuel station portfolio, the $621m acquisition of the AIP Asset Management office portfolio and the $510m acquisition of the David Jones Elizabeth Street store.
However the strength of the market has been felt broadly across most groups with valuation increases contributing the most to AUM growth, accounting for +$19bn or +5.7% of total growth.
The compression in cap rates has been the consistent driver of valuation growth as more funds flow into Australian real assets from domestic and offshore sources.
The Top 10 REITs by assets under management comprise 86% of total asset managed by listed entities, marginally lower than last year. The top 10 are shown in the chart below, with an indication of the 2020 base amount plus the 2021 growth.
Charter Hall moved in to 2nd place in FY21 pushing past SCentre with $52bn in total assets under management, thanks to a $12bn gain, due mostly to $5.7bn in acquisitions and $4.1bn in valuation gains.
Dexus’s M&A activity moved the group past Mirvac to line up alongside GPT, both with $25bn, while Centuria moved into the list year following the $9bn growth, pushing Cromwell out of the list.
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