REIT ASIAPAC
A-REIT NET EQUITY RAISINGS
20,000
15,000
10,000
5,000
0
(5,000)
(10,000)
Jan de Vos,
Portfolio manager at
Resolution Capital
According to Resolution Capital, there
were at least a dozen raisings by A-REITs
totaling over A$4 billion of equity in the
three months to June. Among them were
GPT and Mirvac, which bought back
shares at “materially” lower prices earlier
in the year, says de Vos.
(15,000)
2009
2010
2011
Equity Raised
2012
2013
BuyBacks
2014
2015
2016
Cash Returned (M&A)
2017
2018
2019
URW CDI conversion
(Source: UBS (capital raisings less buybacks, privatisations & capital returns). 2019 not annualised.)
GPT Group raised A$800 million in an
institutional placement to acquire more
than 100,000 sqm of prime Sydney office
space. Separately, Mirvac raised A$750
million to fund projects in Melbourne and
Sydney. “By and large this seems to be
smart capital management, highlighting a
more agile approach of improving Return
on Equity (RoE) and not simply growing
the asset base,” he says.
Emboldened by stronger share prices and
property buying opportunities, the sector
has returned to expansion mode in recent
months, de Vos adds.
As A-REITs look to raise capital and
expand, their potential targets are non-
retail exposed portfolios and those that
are trading at or around to NTA, says
Morrissey. “Even modest premiums may
be candidates if acquirers are prepared
to take a strong view on further valuation
growth or the potential to unlock value
within portfolios considered under-
managed or under-invested,” he says.
De Vos also noted that almost all the
capital raisings in the recent months were
to fund non-retail property acquisitions
and developments. “There is one sector
largely absent from raising equity,
namely the shopping centre retail REITs.
Retail A-REITs that are exposed to larger
shopping centres are trading below Net
Asset Value (NAV), similar to most other
developed markets’ REITs, and therefore
don’t have the cost of capital to expand,”
he says.
He observed that both Scentre Group
and Vicinity have been selling assets with
share buyback programmes in place. “The
A-REIT sector which has always had a
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strong retail focus is slowly decreasing
its overall retail allocation. Whilst retail
REITs are ‘on sale’ in the listed market we
don’t expect a lot of take-privates near
term, as private equity and both on and
offshore institutions seem to be more
interested in increasing their non-retail
property exposure,” he says.
Scasserra at Credit Suisse sees strong
interest in industrial properties due to
an under-allocation to the asset class.
“Investors’ keen interest in industrial
property is being driven by limited supply
and strong demand from logistics and
e-commerce tenants,” he says.
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