August 300, 2023 – Office values could creep even lower as landlords absorb steeper debt costs and higher investment yields, say leading fund managers after writedowns wiped more than A$6 billion from the portfolios of Australia’s real estate investment trusts over the 2023 financial year, according to the AFR.
But the $140 billion A-REITs sector may yet rebound quicker than conservative earnings forecasts suggest, with big malls in particular showing surprising resilience.
Analysis by The Australian Financial Review shows the country’s biggest A-REITs booked $6.1 billion of commercial property write-downs over the 2023 financial year – a stark contrast to the multibillion-dollar gains that flowed onto balance sheets a year ago when interest rates were much lower.
While these write-downs equate to a relatively modest 1.9 per cent year-on-year decline across the sector, falls were sharper over the second half of fiscal 2023 and much more pronounced in the office sector.
