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REIT investors reap dividends

Investors in the real estate investment trust sector will have a combined $2 billion-plus heading their way for reinvestment as the sector trades ex-distribution this week for the second half of the 2014 financial year.

This comes as the Victorian super fund REST Industry Super firms as the main suitor for the $550 million 52 Martin Place office tower in Sydney.

In a reflection of the strength of the sector, GDI Property paid $136 million for the Civic Tower, which was sold by the joint owners, Charter Hall's wholesale PFA Diversified Property Trust and Australand, through CBRE's Scott Gray-Spencer.

There is also the spectre of assets sales by the new Scentre as it looks to reduce debt and boost development coffers. These could include interests in malls such as Westfield Bondi and Fountain Gate in Melbourne.

Overseas and Australian super funds and other REITs would be the main buyers.

In the past week most REITs have declared their final distributions, which have been at market expectations, and will start payments in August when full-year results are released.


According to the market announcements, the sector will trade ex-distribution from Thursday.

Brokers said this comes as mergers and acquisitions remain on the agenda.

One said the REITs were well supported and had recently outperformed equities, in the lead-up to the final week of distribution accrual before the second-half ex-distribution date, ''whereby about $2.5 billion of distributions will be paid, with the majority tipped to be cash as some distribution reinvestment plans are not being offered''.

''The Westfield Retail Trust vote has now been ratified in favour of the WRT/Westfield merger to create the Scentre group, alleviating prior uncertainty in both names,'' a broker said. 

Westfield Corp and Scentre start trading on a deferred basis on Wednesday and on a normal basis on July 3.

The forecast cash recycling also comes as the REIT sector looks at other mergers and acquisitions and public floats.

It is said buyers are running the numbers over Investa Office Fund, which has Morgan Stanley as its key shareholder.

Meanwhile, Scott Dundas, the fund manager of Charter Hall Retail REIT, said the tougher trading and leasing conditions since the federal budget and lower consumer confidence would see 2014 operating earnings come in towards the lower end of its previously stated guidance range of between 29.5¢ and 30¢ per unit.

''This would see the REIT's financial year 2015 development projects taking longer to stabilise, which is expected to result in a subdued financial year 2015 operating earnings growth outlook,'' he said.

Despite the softer retail trading environment, the distribution for the half-year to June 30, 2014, will be 13.65¢ per unit.