TRADITIONAL office, retail and industrial property assets are proving the more profitable investments, helping real estate investment trusts to offset losses in the residential development sector.
The larger diversified REITS - GPT Group and Dexus - reported solid results on Thursday and positive outlooks 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 reflecting 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, which lifted the annual payment to 19.3¢ from 17.8¢ in 2011. It is paid on March 15.
The chief executive, Michael Cameron, said GPT was targeting earnings growth of "at least a 5 per cent" this year, led by stronger leasing activity in its 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 above expectations, mainly due to a continued better outcome on interest expense.
UBS said upgrades to consensus estimates for the year ahead were likely. "There was no change to the payout ratio, however, we believe they do have scope to increase," they said.
Dexus unveiled a net profit for the half year of $267 million, or 5.65¢ per security, an increase of $121.3 million from the prior corresponding period.
The gains came from asset sales and property revaluations.
The 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.
Mr Steinberg said he was confident of completing the sale of the group's last few European and US assets. The funds would be reinvested in local office markets, mainly in 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.