Abstract
For the past 20 years, the Australian Real Estate Investment Trust (A-REIT) sector has consistently produced returns that have outperformed the general equities market. However, the sector has succumbed to the global financial crisis, with the market capitalisation for A-REITs listed on the ASX dropping 53% in the last 12 months to March 2009 to A$47 billion. The relative loss of value was all the more shocking because it followed a period. The current environment is likely to make many features of the previous model difficult to replicate and will almost inevitably lead to a substantial review of the A-REIT structure. It is certain that some will query whether the current model is sustainable. The paper explores the future of A-REITS including conflict of interest management, the impact of higher levels of gearing and falling property values, the potential for a looming catastrophe in the Australian property market as foreign banks exit with no replacement for the CMBS market, the emergence of a government response to market failure through the Australian Business Investment Partnership, the future of the stapled structure and the possible impact of tax review.
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