AREIT s performance rebounds from GFC woes

AREIT’s performance rebounds from GFC woesA summary of the AREIT sector for Q4 FY13-14 shows that it has rebounded strongly since the GFC, characterised by improvements in AREIT’s balance sheets and favourable market fundamentals.BDO’s AREITs Highlights report examines capital raisings, mergers and acquisitions (M&A) and initial public offerings (IPOs) to provide an overview of AREIT strategic activity in the past quarter.It says that capital-raising activity has been subdued during the quarter and has been characterised by a focus on funding acquisitions rather than reducing debt levels. AREITs raised $196 million in capital in Q4, constituting 20 per cent less than the previous quarter. It shows that there are either fewer acquisition opportunities or that AREITs are comfortable with their balance-sheet positions. BDO predicts an increase in capital-raising activity in coming quarters as more acquisition opportunities arise and market conditions continue to improve.Q4 was marked by strong M&A activity, with 21 purchases worth $2.3 billion and 10 sales worth $1.5 billion made. The Australand takeover, the Westfield Group restructure, and major acquisitions by GTP Group and Growthpoint were all among the high-profile sector transactions during the quarter.Acquisition activity remained higher than seller activity for the third quarter in a row, according to BDO, but it says the average sale price of $152 million was the highest recorded for more than a year.The IPO market has been relatively quiet in Q4, which was to be expected following five listings in Q2 having raised approximately $1.4 billion. BDO says favourable market and improvements in the sector’s pricing metrics should result in more listings in future quarters.BDO’s full-year AREIT report is due for release in November.