Oz: Land of Opportunity for S-REITs

Australia is an attractive destination for S-REITs. Pre-Covid, the continent was also an attractive tourist destination and an education destination for Asian students. In fact, a standing joke among economists used to be that the Australian economy comprised three sectors, resources, tourism and education.

Keppel REIT was perhaps the first commercial REIT to dip its toes in Australia. Its first Australian asset was a 50% stake in 275 George Street in Brisbane in 2010. In July, Keppel REIT’s manager announced the divestment of this property to Charter Hall Prime Office Fund for A$275 million ($267.7 million). The divestment price was 7.8% above the last valuation and 59% above the original purchase price of A$166 million in 2010. That is as good a reason as any to buy and sell a property. No surprise then that other S-REITs have sought their fortunes down under.

ARA LOGOS Logistics Trust (ALOG) is this year’s best S-REIT performer in terms of total unitholder returns. In unit price alone, ALOG has returned 48%. In April, ALOG completed the acquisition of five logistics properties located in Australia, a 49.5% interest in the New LAIVS Trust and a 40% interest in the Oxford Property Fund. The balance 50.5% interest in the New LAIVS Trust and the balance 60% interest in the Oxford Property Fund are held by funds indirectly managed by LOGOS Property Group, ALOG’s sponsor.

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