A-REITs and Rates: How Property Trusts React to RBA and Bond Yields

A-REITs and Rates: How Property Trusts React to RBA and Bond Yields

Sector: Real Estate | Product: The Daily Market Pulse | 27 October 2026

Executive Summary

A-REITs and Rates: How Property Trusts React to RBA and Bond Yields Sector: Real Estate | 27 Oct 2026 | General Information Only Executive Summary A-REIT sector is highly rate sensitive and was mixed on 27 October 2026 as bond yields held steady ahead of CPI. Australian 10 year yield is 4.45 percent, US 10 year above 5 percent per BlackRock commentary. REITs underperformed banks and tech over past two years as rates rose from 0.1 to 4.35 percent. Key A-REITs include Goodman Group industrial with $80b assets under management, development work in progress $12b, occupancy 99 percent, WALE 5.2 years, yield 1.2 percent. Scentre Group retail with $34b shopping centres, occupancy 99.3 percent, sales up 3.5 percent, yield 5.8 percent. Stockland diversified with residential settlements 5,800 lots, margin 18 percent, yield 5.2 percent. Dexus office with occupancy 92 percent, incentive 28 percent, cap rate 5.8 percent up 100bps since 2022. Key Financials and Business Model A-REIT detailed: Goodman Group AUM $80b with $50b external, development WIP $12b with 80 percent pre committed, 99 percent occupancy, WALE 5.2 years, rent growth 5 percent, cap rate 4.8 percent, NTA $8.50, price $32, premium 1.4x, yield 1.2 percent, gearing 12 percent, interest...

Key Business Drivers

cover 6.2x, development IRR 15 percent, cost of debt 3.5 percent. Market Drivers on 27 October 2026 Scentre Group: $34b shopping centres with 42 centres, occupancy 99.3 percent, sales $28b MAT, specialty sales up 3.5 percent, rent $800/sqm, occupancy cost 15.2 percent, cap rate 5.25 percent, NTA $4.20, price $3.60, discount 15 percent, yield 5.8 percent, gearing 32 percent, interest cover 3.2x, debt $8b at 4.8 percent cost. Stockland: residential settlements 5,800 lots at $350k average, margin 18 percent, 70k lot bank, commercial $12b with logistics 2m sqm occupancy 99 percent, retail $5b occupancy 99 percent, cap rate 5.5 percent, NTA $4.80, price $4.60, yield 5.2 percent, gearing 28 percent. Dexus: office $15b with 40 assets, occupancy 92 percent, incentive 28 percent, effective rent down 5 percent, cap rate 5.8 percent up 100bps since 2022, NTA $10.20, price $7.80, discount 24 percent, yield 6.5 percent, gearing 30 percent, interest cover 3.0x. GPT Group: diversified $14b with office $6b , logistics $5b , retail $3b , occupancy 97 percent, NTA $5.40, price $4.50, yield 5.5 percent. Mirvac: residential $3b settlements 2,200 lots, commercial $12b with office $5b , industrial $4b , retail $3b , NTA $2.50, price $1.80, discount 28 percent,

Financials and Key Metrics

• yield 5.8 percent. Balance sheet: sector gearing target 25 to 35 percent, average 30 percent, cost of debt up from 3.2 to 5.4 percent, interest cover down from 4.5x to 3.2x, refinancing $8b in FY27 at higher rates, 60 percent hedged at 3.5 percent until 2026. Leasing: industrial rent growth 8 percent Sydney, 6 percent Melbourne, incentive 10 percent down from 20 percent, vacancy 2 percent. Retail rent growth 2.5 percent, specialty rent $1,200 /sqm, occupancy cost 15.2 percent. Office effective rent down 5 percent, vacancy 13 percent Sydney, 15 percent Melbourne, incentive 30 to 40 percent. Valuation: yield spread to 10 year bond 4.45 percent is 80bps for retail REITs versus historical 250bps, indicating expensive. Goodman premium due to
• development. Office discount due to work from home with utilisation 60 percent. Catalysts: CPI 28 Oct, RBA 4 Nov, half year results Feb. If RBA hikes to 4.85 percent as ANZ expects on 1.0 percent trimmed mean, REITs fall 3 to 5 percent. Income: 90 percent of taxable income distributed, franking 0 to 20 percent, tax deferred 20 to 40 percent. Correlation: REITs correlation to equities 0.65, to bonds 0.3, inflation hedge with CPI linked leases 40 percent of leases. China impact: PBOC injection 1.01 trillion yuan and 5 year yield 1.34 percent supports Goodman China assets $2b . Sector story on 27 Oct is about waiting for rate peak, with property lagging but leasing resilience outside office, and Goodman
• as growth exception. Additional Important Detail for Real Estate Sector: Goodman: AUM $80b with $50b external $30b internal development WIP $12b with 80 percent pre committed 99 percent occupancy WALE 5.2 years rent growth 5 percent cap rate 4.8 percent NTA $8.50 price $32 premium 1.4x yield 1.2 percent gearing 12 percent interest cover 6.2x development IRR 15 percent cost of debt 3.5 percent development margin 25 percent management fees $400m performance fees $100m. Scentre: $34b centres 42 centres occupancy 99.3 percent sales $28b MAT specialty sales up 3.5 percent rent $800/sqm occupancy cost 15.2 percent cap rate 5.25 percent NTA $4.20 price $3.60 discount 15 percent yield 5.8 percent gearing 32 percent interest cover 3.2x debt $8b at 4.8
• percent cost hedging 70 percent at 3.5 percent until 2026 leasing deals 1,200 annually incentive 10 percent for specialty. Stockland: settlements 5,800 lots at $350k average margin 18 percent 70k lot bank commercial $12b logistics 2m sqm occupancy 99 percent retail $5b occupancy 99 percent cap rate 5.5 percent NTA $4.80 price $4.60 yield 5.2 percent gearing 28 percent interest cover 3.5x debt $3b. Dexus: office $15b 40 assets occupancy 92 percent incentive 28 percent effective rent down 5 percent cap rate 5.8 percent up 100bps since 2022 NTA $10.20 price $7.80 discount 24 percent yield 6.5 percent gearing 30 percent interest cover 3.0x debt $5b at 5.2 percent. GPT: diversified $14b office $6b logistics $5b retail $3b occupancy 97
• percent NTA $5.40 price $4.50 yield 5.5 percent gearing 28 percent. Mirvac: residential $3b settlements 2,200 lots commercial $12b office $5b industrial $4b retail $3b NTA $2.50 price $1.80 discount 28 percent yield 5.8 percent gearing 35 percent. Balance sheet: gearing target 25 to 35 percent average 30 percent cost of debt up from 3.2 to 5.4 percent interest cover down from 4.5x to 3.2x refinancing $8b in FY27 at higher rates 60 percent hedged at 3.5 percent until 2026. Leasing: industrial rent growth 8 percent Sydney 6 percent Melbourne incentive 10 percent down from 20 percent vacancy 2 percent retail rent growth 2.5 percent specialty rent $1,200/sqm occupancy cost 15.2 percent office effective rent down 5 percent vacancy 13

Market Dynamics on 27 October 2026

retail $5b occupancy 99 percent cap rate 5.5 percent NTA $4.80 price $4.60 yield 5.2 percent gearing 28 percent interest cover 3.5x debt $3b. Dexus: office $15b 40 assets occupancy 92 percent incentive 28 percent effective rent down 5 percent cap rate 5.8 percent up 100bps since 2022 NTA $10.20 price $7.80 discount 24 percent yield 6.5 percent gearing 30 percent interest cover 3.0x debt $5b at 5.2 percent. GPT: diversified $14b office $6b logistics $5b retail $3b occupancy 97 percent NTA $5.40 price $4.50 yield 5.5 percent gearing 28 percent. Mirvac: residential $3b settlements 2,200 lots commercial $12b office $5b industrial $4b retail $3b NTA $2.50 price $1.80 discount 28 percent yield 5.8 percent gearing 35 percent. Balance sheet: gearing target 25 to 35 percent average 30 percent cost of debt up from 3.2 to 5.4 percent interest cover down from 4.5x to 3.2x refinancing $8b in FY27 at higher rates 60 percent hedged at 3.5 percent until 2026. Leasing: industrial rent growth 8 percent Sydney 6 percent Melbourne incentive 10 percent down from 20 percent vacancy 2 percent retail rent growth 2.5 percent specialty rent $1,200/sqm occupancy cost 15.2 percent office effective rent down 5 percent vacancy 13

Valuation and Portfolio Role

China impact: PBOC injection 1.01 trillion yuan and 5 year yield 1.34 percent supports Goodman China assets $2b . Sector story on 27 Oct is about waiting for rate peak, with property lagging but leasing resilience outside office, and Goodman as growth exception. Additional Important Detail for Real Estate Sector: Goodman: AUM $80b with $50b external $30b internal development WIP $12b with 80 percent pre committed 99 percent occupancy WALE 5.2 years rent growth 5 percent cap rate 4.8 percent NTA $8.50 price $32 premium 1.4x yield 1.2 percent gearing 12 percent interest cover 6.2x development IRR 15 percent cost of debt 3.5 percent development margin 25 percent management fees $400m performance fees $100m. Scentre: $34b centres 42 centres occupancy 99.3 percent sales $28b MAT specialty sales up 3.5 percent rent $800/sqm occupancy cost 15.2 percent cap rate 5.25 percent NTA $4.20 price $3.60 discount 15 percent yield 5.8 percent gearing 32 percent interest cover 3.2x debt $8b at 4.8 percent cost hedging 70 percent at 3.5 percent until 2026 leasing deals 1,200 annually incentive 10 percent for specialty. Stockland: settlements 5,800 lots at $350k average margin 18 percent 70k lot bank commercial $12b logistics 2m sqm occupancy 99 percent

• Valuation Multiple: Trades at premium to historical averages due to quality and defensive characteristics
• Dividend and Income: Franked dividends and distribution yields support income focused allocation
• Risk-Adjusted Return: Beta and correlation metrics indicate defensive or cyclical profile depending on sector

Risks and Catalysts

Key Risks: retail $5b occupancy 99 percent cap rate 5.5 percent NTA $4.80 price $4.60 yield 5.2 percent gearing 28 percent interest cover 3.5x debt $3b. Dexus: office $15b 40 assets occupancy 92 percent incentive 28 percent effective rent down 5 percent cap rate 5.8 percent up 100bps since 2022 NTA $10.20 price $7.80 discount 24 percent yield 6.5 percent gearing 30 percent interest cover 3.0x debt $5b at 5.2 percent. GPT: diversified $14b office $6b logistics $5b retail $3b occupancy 97 percent NTA $5.40 price $4.50 yield 5.5 percent gearing 28 percent. Mirvac: residential $3b settlements 2,200 lots commercial $12b office $5b industrial $4b retail $3b NTA $2.50 price $1.80 discount 28 percent yield 5.8 percent gearing 35 percent. Balance sheet: gearing target 25 to 35 percent average 30 percent cost of debt up from 3.2 to 5.4 percent interest cover down from 4.5x to 3.2x refinancing $8b in FY27 at

• Near-term Catalyst: CPI on 28 October, RBA decision on 4 November, and upcoming earnings season
• Medium-term Driver: China stimulus with PBOC injecting record 1.01 trillion yuan and 5-year yield at record low 1.34 percent
• Long-term Theme: AI infrastructure buildout with $300b funding in 2026, grid capex $120b to 2030, and energy transition

Disclaimer

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