Welcome to this week’s Property News.
The quarterly results being presented by the AREITs continue to point to the ongoing weakness in the larger Shopping Centres and CBD’s exposed assets.
SCentre and Vicinity are both struggling to see growth in customer traffic and as a consequence are being forced to accept lower rental and higher incentives for new leases. The impacts these changes will have to valuations will be announced over the next 6 weeks as the AREITs approach the end of the financial year. We expect another -10% decline in valuations will be felt by those holding Regional & Super Regional Shopping Centres.
On the other hand Industrial REITs including Goodman have reported strong rental growth and high occupancy’s which will lead to higher valuations. APN Industria reported a strong 12% increase in valuations this quarter and others will no doubt follow off the back of the significant transactions recently completed by Blackstone.
It was great to see the Property Council’s April data for CBD activity, pointing to an increase in workers returning to the CBD. Melbourne and Sydney however continue to struggle with 41% and 59% occupancy respectively.
The Macquarie Conference is often a highlight of the year for major investors as it provides an opportunity to hear from a broad cross section of leading industry executives talk about their company and the markets they operate in. This year, 5 AREIT’s released their presentations from the conference. The key messages from the REITS were that the economic recovery was well underway, but the challenges in some sectors continue to see investors in a flight to quality with assets secured by long term leases highly sought after.
As was demonstrated in the Conference papers, ESG factors are being adopted by some REITs as a differentiator, while others see them as a series of reporting obligations. This week AMP Capital and Vicinity both announced significant energy savings initiatives as they both push towards a Zero Net Carbon targets. There are few REITs that explain or effectively track the link between ESG and positive financial performance. We expect this will change over the year ahead as investment managers seek to make better decisions on ESG initiatives.
Regular readers would be aware of our preferences in the AREITs, however Premium Members are now able to access our Top Picks lists from the AREIT menu item as shown below, as well as detailed news & information on 35 AREITs.
We consider the investment strategy of the REITs in our Top Picks List to be right for the current market and that the REIT should be considered for investment. This does not imply that we think their pricing represents good value or that we are recommending an investment in the REIT. As each persons circumstances are different, we naturally, recommend personal advice be obtained before making any investment decision.
If you have any news, information or research reports you’d like us to share with the market, please feel free to send me an email at info@propertymarkets.news.
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