REITs roll out results The 2013 reporting season will start this week, with Australand the first real estate investment trust to reveal its performance for the past six months. The remainder of the REITs roll out their full-year numbers from mid-August and all are expected to show solid growth. Analysts are expecting the directors' narrative to focus on the ongoing balance sheet repair, including debt refinancing at lower margins. This is good news, as it has led many REITs' security prices to be pushed back to parity or higher, to the net tangible asset values. The fund manager at 360 Capital Industrial Fund, Tony Pitt, said during the week the banks were now more willing to negotiate better deals, which, in turn, had given investors comfort that financing was under control. Mr Pitt forecast a 9.7 per cent rise in the 2013 financial year operating earnings per unit (EPU), to about 21.5 cents per unit (CPU). He said the interest-rate margin had also decreased, saving between $1.1 million and $1.3 million a year, and the current loan to valuation ratio (LVR) was at 47 per cent. "If the fund's LVR is below 45 per cent, the financier has agreed to a further step down in margin, which takes the annual saving from interest-rate margin reductions to $1.3 million [1.40¢ per unit]," Mr Pitt said. The last year has also been active for office leasing, but that is expected to come under pressure in the coming year. The impact of the fluctuating dollar and the continued poor performance in retail will also be the subject of much discussion. The consensus among the researchers is that the 2013 year was again one of consolidation, as many investors focus back on pure Australian investment. That has seen property sales of assets worth more than $5 million rise during the past 12 months, although the battle has been to snare the assets away from the growing number of offshore investors entering the Australian market. CBRE head of research Australia, Stephen McNabb, said in his recent report that investment activity in the Australian commercial property sector was continuing to strengthen. The June quarter 2013 sales were up 24 per cent on the prior corresponding period. Sales for the 2012-13 financial year totalled $16 billion, a rise of 12 per cent on 2011-12," he said. Because there is still an element of growth risk, demand has been concentrated on high-quality assets, which is driving ongoing compression in prime yields. Secondary assets have underperformed from this perspective, with yields stable to marginally up in some categories," he said. According to analysts at Bank of America Merrill Lynch, all the Australian REITs that reported June distributions before the year's end saw flat or positive distribution growth in the 2013 financial year. Excluding REITs with a December balance date, the sector delivered 2.3 per cent distribution growth.