POWERED BY MOMENTUM MEDIA
Disclosure and reporting concerns in AREIT market: researcher
Some Australian real estate investment trusts (AREITs) are refusing to mark their assets to market to avoid having to face new stricter terms from their creditors, according to research house Adviser Edge.
Adviser Edge believes that the rolling over of debt remains a key concern for many AREITs in the coming year. But while there are concerns about financing, "the reality is that loans are being rolled over - albeit with a considerable expansion in the cost of lending". However, the research house said "a question still remains on whether some of the smaller AREITs will be treated as generously with regard to debt refinancing".
Adviser Edge has been concerned for some time about the level and accuracy of disclosure and financial reporting by some AREITs, resulting in distortion or misrepresentation of information provided to markets.
For example, the research house said some senior managers of AREITs have been promoting trusts as "conservatively geared" at the same time as "desperately renegotiating with the bankers to roll over their debt".
"At the same time, many were wondering exactly how managers of AREITs presenting aggressive sales plans to satisfy banking covenants were going to sell assets at a time when there appeared to be no fair market for them," the report stated.
And while the AREIT market has rallied over recent months, no such movement has occurred in the direct property market, which has fallen in value by around 15 per cent to 35 per cent across different locations and asset classes.
AUTHOR
Mike Taylor
Recommended for you
SuperRatings has shared the top 10 balanced options of the last financial year.
Rest Super remains “fully committed” to equities, even as it anticipates higher market volatility than experienced in previous decades.
Australian superannuation funds have again generated strong returns for FY25, with the median growth fund returning 10.5 per cent for the year, according to Chant West.
The US remains a standout destination for innovation and commercialisation, according to MLC Asset Management chief investment officer Dan Farmer.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom 465 Calder Road Calder
99.46 3 y p.a(%)
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
78.55 3 y p.a(%)
4
BetaShares Crypto Innovators ETF
50.39 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
47.50 3 y p.a(%)
