up >12% , page-2

Could this have something to do with it?



By Wouter Klijn
Fri 09 Apr 2010
Small REITs perform best, according to the findings of a new survey.




Small Australian real estate investment trusts (A-REITs) were the best performers in the property trust sector over the six months to 31 December 2009.

These trusts benefited from more stable operating conditions and returning investor interest to the sector, according to a survey of the sector by international accounting firm BDO.

The top three best-performing A-REITs all had a market capitalisation of less than $100 million, while two of them were smaller than $50 million.

GEO Property Group, previously known as MFS Diversified Group, showed the best performance over the six-month period.

The company's share price rose 81 per cent from 10.5 cents to 19 cents, it reinstated its dividend, and generated a good cash yield.

The BDO survey, which has been running for 15 years, ranks A-REITs based on a number of performance criteria, including share price, dividend yield, capital yield and gearing levels.

The second and third best performers were the Multiplex European Property Fund, and the Challenger Wine Trust.

"""""Centro Properties Group, whose December 2007 announcement that it could not refinance its debts marked the start of an 80 per cent fall in the listed property sector, was the fifth best-performing A-REIT over the period."""""

But the A-REITs that performed best generally came off a low base.

"They were the hardest hit in the previous period," BDO director of corporate finance Sebastian Stevens said.

Although the shares of A-REITs still trade at a discount to the value of their property portfolios, the gap is closing.

"The size of the discount to NTA (net tangible assets) has fallen to an average of 28.9 per cent from 46 per cent in 2009," BDO senior manager advisory corporate finance Steven McCarthy said.

""""Looking forward, McCarthy said the sector could see an increase in merger and acquisition activity this year."""

Yesterday, Mirvac announced it was in exclusive talks with Westpac to acquire the Westpac Office Trust. "This may trigger the start of some consolidation in the market," Stevens said.