AREITs beat index

Australian real estate investment trusts (AREITs) finished the financial year 24.2 per cent higher than the previous year, besting the 22.8 per cent total return of the S&P/ASX 200 index.

Australian real estate investment trusts (AREITs) finished the financial year 24.2 per cent higher than the previous year, besting the 22.8 per cent total return of the S&P/ASX 200 index.

Despite volatility during the past few weeks, this year's performance of the sector was the fourth straight positive year for AREITs, which now average a 15.4 per cent return.

Brokers have forecast average distribution growth for the AREITs for the 2013 financial year to be about 4 per cent in the reporting season, starting with Australand on July 24.

American REITs also posted gains overall for the first six months of 2013, according to the National Association of Real Estate Investment Trusts (NAREIT).

The FTSE NAREIT All REITs Index was up 5.41 per cent on a total return basis for the first six months of the year and the FTSE NAREIT All Equity REITs Index was up 5.79 per cent.

The US REITs finished the half behind the broader equity market. The S&P 500 was up 13.82 per cent, proving the two markets do not always move together.

NAREIT president and chief executive Steven A. Wechsler said in a report that the REITs provided potential portfolio diversification due to the relatively moderate correlation of their returns with those of the broader market.

US REITs have maintained strong balance sheets, NAREIT reports. The debt ratio for equity REITs is 33 per cent, near its historic low.

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