Demand for higher yielding, income producing assets, has driven strong results for fund managers Charter Hall and Centuria and prompted predictions of continued growth.
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The two groups are similar, with property management and property investment divisions, that include unlisted and listed real estate investment trusts, under one group banner.
In releasing their financial results on Wednesday, both said there was a rise in funds under management in the past year, with Charter Hall a whisker away from $20 billion and Centuria, thanks to its purchase of the 360 Capital platform, now managing about $4.2 billion.
For the year, Charter Hall reported a statutory profit after tax of $257.6 million, up 19.7 per cent for the 2017 financial year with operating earnings per security post-tax of 35.9?? up 18.1 on the prior year. The interim dividend of 15.2?? will be paid on August 31.
Charter Hall's chief executive David Harrison said the management saw a 13.7 per cent growth in funds under management to $19.8 billion. The division completed 646 leasing transactions during the period.
The property investment portfolio increased by 39 per cent to $1.5 billion comprising $304 million of net investments and $118 million of net revaluations, with the property investment earnings yield of 6.9 per cent.
"There has been a significant capital inflow from diversified equity sources, with $2.36 billion of gross equity raised during the year split 60 per cent from domestics investors and the rest form offshore," Mr Harrison said.
This went into listed funds including, the successful float of Charter Hall Long WALE REIT; wholesale funds and partnerships and direct funds with further equity raising underway in our unlisted trusts.
Mr Harrison declined to comment on the thwarted deal with the Hastings infrastructure fund, but he said Charter Hall will continue to look for opportunities in that sector.
Centuria's chief executive John McBain said the past year was a "bumper" one, driven by the 360 Capital deal and investor demand for stable, income producing office and industrial assets.
Centuria Capital reported a 2017 financial year operating net profit after tax of $15.5 million, up 37 per cent from $11.3 million and confirmed a distribution of 7.5?? per share for the financial year, 43 per cent. The interim dividend of 5.2?? will be paid on August 24.
"The 360 Capital acquisition was a very significant contribution to growth in funds under management and our consequent increase in scale and market presence. The result has been a step-change for Centuria Capital, bringing our business to scale and this activity should enable near-term ASX 300 inclusion," Mr McBain said.
"In addition, the majority of 360 Capital's funds were listed funds which were highly complementary to our platform which was previously skewed toward unlisted property funds.
Mr McBain said the year ahead will see more organic growth with each of the listed REITs and unlisted funds looking to spend a bout $200 million apiece on acquisitions and developments.
