This article is from the Australian Property Journal archive
The appetite from cashed up investors for Listed Property Trusts shows no sign of abating and at the same time, investors are increasingly growing confident in investing overseas, according to the latest Australian Stock Exchange report.
According to the ASX’s February 2006 Listed Managed Investment update, more funds were injected into the LPTs sector than any other managed investment.
In fact, the LPTs sector beat all the managed investments added together.
Property Investment Research’s head of listed securities Paul Pavlidis said LPTs are popular among investors for a number of reasons.
“LPTs are a lot simpler to understand than other managed investments. For many mums and dads, it is a step up from owning a home.
“And some LPTs are offering yields of between 8% and 8.5%, and then you couple that capital appreciation, the returns are reasonable.
“Australia also has an aging population. Why would 60 year old plus investors invest in return funds where they have to wait five to seven years?,” he added.
Pavlidis said cross border investments is also playing a major role in the growth of LPTs.
“For example, investors in Japan are borrowing at a 0% interest rate and investing in high yielding assets held by LPTs.
“Australian LPTs have a proven track of returns,” he added.
According to the report, a total of 2.04 billion LPTs stocks were traded in February 2006 with a value of $6.42 billion. As a result, in the past two years the LPTs sector has almost doubled in size.
In February 2004, the market cap for LPTs was $59.4 billion with 51 LPTs trading on the ASX and in February 2005, the market cap for LPTs was $85.3 billion with 52 LPTs trading on the ASX.
As of February 28, 2006, the market cap for LPTs was $104.4 billion with 60 LPTs trading on the ASX.
Pavlidis said the fund managers are certainly taking advantage of the cashed up investors looking to park their money.
He added that in 2004 $5.8 billion was raised through IPOs and capital raisings and in 2005, $6.4 billion was raised.
As of February 28, 2006, $0.85 billion has been raised.
The ASX report also showed the trend of ASX listed LPTs investing in overseas assets is continuing to grow.
According to the report, three recent LPTs listings were for overseas acquisitions including the $258 million Rubicon Europe Trust, the $171 million Reckson New York and $30 million Mariner American Property trust.
Pavlidis said this is further proof that high yielding assets in Australia are hard to come by.
“General Property Trust surprised the market when they were able to buy a super regional asset like the Highpoint Shopping Centre at a yield of 5.5%.
“These types of assets are becoming a rarity in Australia,” he added.
Pavlidis said the LPTs investing in overseas assets will only continue growing.
He forecast that the presence in Europe will continue to increase with Asia to follow suit.
By Nelson Yap
