Fitch rates two property REITs
Fitch Ratings has awarded stable outlooks to two Australian REIT issues in light of their leading positions in the Australian real estate market.
Shopping centre company Scentre Group was rated as A/Stable while commercial property group Mirvac Group was rated as A-/Stable. The companies hold two of the largest REITs in Australia at $54 billion and $11 billion respectively.
Fitch said the high rating reflected the high visibility of future rental income streams, their leading positions in the market and their commitment and flexibility in managing financial structures to levels commensurate with their ratings.
Both firms were able to respond to changing demand trends, Fitch said, which reduced the cyclical valuation volatility of their portfolios and to take advantage of the prime locations of their properties.
However, the ratings agency noted REITs which had exposure to lower grade and regional properties were likely to come under pressure in the future as the property market begins to cool, which would lead to valuation declines.
These types of REITs would be worse-affected than those which had exposure to high quality assets in major domestic cities.
AUTHOR
Laura Dew
Recommended for you
Platinum Asset Management has provided an update on the possibility of a merger with asset manager L1 Capital following a period of due diligence.
Commentators may be forecasting consolidation in private market firms but a survey of the industry itself expects new manager formation will still outpace this, especially in Asia Pacific.
Fund manager Pacific Current has appointed a former superannuation chief executive as its newest chair, succeeding Tony Robinson who departs after almost a decade to focus on his role at COG Financial.
The possibility of a private credit ETF is looking unlikely for now with US vehicles seeing limited uptake, according to commentators, but fixed income alternatives exist that can provide investors with a similar return.
