US listed property trust market dwarfs second-placed A-REITS

It is often mentioned that Australia has the second-biggest listed property trust sector in the world behind the US.

But second place might as well be 100th when you consider the size of the US REIT sector.

The following graph shows that Australia’s REIT market has a market capitalisation of almost US$82 billion, with Westfield and its spin-off Westfield Retail Trust representing around 40% of this total.

This makes it just over one-eighth the size of the enormous US REIT market, which has a market capitalisation of $632 billion.

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According to the Ernst & Young Global Perspectives 2012 REIT report, the US REIT market returned to “robust growth” last year and significantly outperformed the wide share market.

“The total returns of public equity REITs increased more than 8% in 2011, compared with about a 2% gain for the S&P 500. REITs raised a record US$37.5 billion of equity last year — the most since the US$32.7 billion of 1997," says Ernst & Young.

“Their total market capitalization increased to US$632 billion, the highest since 2006, when it reached US$412 billion.

The report also notes that, like Australian listed property trusts, US REITS are also deleveraging.

As of September 2011, the listed US REIT industry’s ratio of debt divided by total market capitalization stood at 41.6%, approximately its historical average.

"Of 140 REITs tracked by SNL Financial, about one-third raised their dividends in 2011, compared with 17% the previous year.

"Commercial property markets are continuing to improve, although the recovery has been uneven," notes Ernst & Young.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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