TRADITIONAL office, retail and industrial property assets are proving the more profitable investments, helping real estate investment trusts offset losses in residential development.
The larger diversified trusts, GPT Group and Dexus, reported upbeat results on Thursday, with a positive outlook for the year ahead.
GPT's result was for the full year, while Dexus covered the first half of the current financial year.
GPT more than doubled net profit, and forecast solid earnings growth from its office assets and growing industrial portfolio.
For the year to December 31, profit rose from $246.2 million to $594.5 million due to a rise in the value of its property portfolio. A final distribution of 5.1¢ was declared, up 8.4 per cent on a year ago, lifting the annual payment to 19.3¢ from 17.8¢ in 2011. It is paid on March 15.
Chief executive Michael Cameron said GPT was targeting earnings growth of at least 5 per cent in 2013, led by stronger leasing in office and retail assets.
He declined to elaborate on the indicative offer GPT made to Australand in December, except that the group was "committed to advancing a proposal that is in the best interests of Australand and GPT security holders".
"It is important to understand we don't need to do the deal to achieve our goals, but if successful, achievement of our strategic priorities would be accelerated," he said.
Goldman Sachs analysts said the result was slightly ahead of expectations, mainly due to a continued better outcome on interest expense.
UBS said upgrades to consensus for the year ahead were likely. "There was no change to the payout ratio, however, we believe they do have scope to increase," the UBS team said.
Dexus announced a first-half net profit of $267 million, or 5.65¢ per security, an increase of $121.3 million from the previous corresponding period. The gains came from asset sales and property revaluations.
Dexus chief executive Darren Steinberg declared an interim distribution of 2.89¢, up from 2.67¢.
He said the outlook was positive as the group focused on leasing space across its new Sydney office assets, including 50 Carrington Street and the spare floors at Grosvenor Place, at 225 George Street.
He was confident of completing the sale of the group's last few European and US assets and using the money to reinvest in Australian office markets, mainly Sydney and Melbourne.
"The composition of our property portfolio is on target and we believe at this point of time it provides the right mix to deliver superior returns to security holders," he said.
Deutsche Bank analysts said the result was "solid" and slightly ahead of their estimates.
They said Dexus maintained its 2013 outlook of 7.75¢ a security.