A $500 million Asia Pacific mandate has been to awarded to the global Heitman group by Advance Australia, with a focus on the high-yielding real estate investment trusts and other global listed property investments.
In a separate deal, Heitman’s private equity arm is raising a new US$500 million fund to invest in physical real estate in Asia and have appointed CBRE Capital Advisors to market this to potential investors.
It comes as the Australian REIT sector gains momentum through new floats, including the Centuria Metropolitan REIT, which closed oversubscribed and raised $114 million.
The Centuria is being run by former head of Mirvac Nick Collishaw, and will own five metropolitan office properties and three industrial properties, valued at $182.9 million.
"Without getting ahead of ourselves, we continue to see value propositions in the metropolitan market and look forward to growing CMA for the benefit of all its investors," Mr Collishaw said.
Centuria is being advised by UBS and CIMB, with Henry Davis York as legal adviser.
According to a new report from Standard & Poor's, its analysts project a stable credit outlook for the REITs it rates.
"The REITs have amassed high-quality portfolios that can withstand economic headwinds better than lesser-quality properties held by their competitors, sustaining their credit quality despite sluggish rental growth," the report says.
John White, managing director and head of Heitman's Asia Pacific Public Real Estate Securities group, said demand for A-REITS was high, due to the sector's high-yielding characteristics.
But he said there was caution in investing in Australia due to the volatile currency, particularly for REITs with overseas exposures.
"Investor demand for real estate continues to grow around the world. Even in this period of irregular economic growth, occupier demand is showing improvement and new construction is still limited in most markets," Mr White said.
Heitman invests in private real estate equity, with assets under management of $US27.5 billion ($31.8 billion).
Heitman also has US$3.1 billion in assets under management in public real estate securities and US$500 million in real estate debt.
"Asset classes we like include listed real estate, which offer investors an attractive yield, supported in most cases by stocks which are trading at a discount to their tangible asset backing, offer a compelling return outlook," Mr White said.
"Through allocating a considerable amount of capital to listed real estate, we believe that Advance is making a strategic move to enhance exposure to opportunities from the current and long-term expected market conditions for listed property."
At present the new fund is aiming for a 10 per cent weighting to Australia, with a preference to the retail sector.
"We feel more confident towards the retail space, due to the resurgence in consumer spending and the entrant of the new international fashion brands. It's not a high conviction, but we feel the office sector, at this stage, still has some tough issues to deal with."
