Australia, Funds Management, Real Estate - Sunday, June 1, 2008 13:04 - 0 Comments

Aussie REITS hit trouble overseas

Liquid Real Estate, Euromoney magazine, June 2008

For years, Australia’s listed property trusts have been going global. And until recently, it seemed like a good idea: diversified revenues, lower borrowing costs, yield enhancement opportunities. But as the credit crunch has wreaked havoc in the LPT market, it’s generally those trusts who ventured offshore who have been hit hardest.

Australia’s LPT market – or A-REITs, as the Australian Securities Exchange re-christened it this year to fit in with global terminology – is made up of 69 trusts with a combined market cap of A$103 billion as of April 30, according to the ASX. It’s a sophisticated market, one that has gone through many changes over the years, from expansion, to consolidation, to changing business structures and rising gearing. One key trend is that the assets that make up those trusts have becoming more and more global by the year, and today international holdings make up 44% of the sector, according to UBS, with the US alone accounting for 33%. Continue…

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