Listed trusts just tread wa­ter against the in­dex

The Weekend Australian - Review - - Landmarks - SI­MON GAR­ING AN­A­LYST

THE listed prop­erty trust sec­tor lacked any clear di­rec­tion in Oc­to­ber with vol­umes be­low av­er­age and the in­dex fall­ing 0.4 per cent.

Aus­tralia’s prop­erty trusts lagged the over­all share­mar­ket by 3.3 per cent, for the sec­ond month in a row.

LPTs have trailed the broader mar­ket over three months ( down 1.3 per cent), six months ( down 7.7 per cent), a year ( down 12 per cent), and five years ( down 3.7 per cent).

Mea­sured over a decade they have pulled ahead by 0.1 per cent.

ING Real Es­tate Com­mu­nity Liv­ing Group was the strong­est per­former for the month ( up 9 per cent) de­spite no ma­te­rial news dur­ing that time.

The ING fund has been a key pick among mid- to- small caps with po­ten­tial up­side from de­vel­op­ments and stronger than fore­cast in­come growth from US and Aus­tralian re­tire­ment vil­lage and stu­dent port­fo­lios.

Other strong per­form­ers in­cluded Mac­quarie Leisure Trust ( up 6.2 per cent) and Mir­vac ( up 6.1 per cent).

Ru­bi­con Amer­ica Trust ( down 8.7 per cent), GPT ( down 8 per cent) and Aus­tralian Ed­u­ca­tion Trust ( down 5.5 per cent) were the worst stocks.

Of the prop­erty trust sub- sec­tors, real- es­tate man­agers and de­vel­op­ers beat both the LPT in­dex by 6.7 per cent — with Lend Lease up 6.1 per cent — and the broader mar­ket by 3.4 per cent. Re­tail prop­erty trusts ( down 0.1 per cent), of­fice trusts ( down 0.2 per cent) and in­dus­trial trusts were the strong­est sub- sec­tors over the month, each pulling ahead of the LPT in­dex.

Di­ver­si­fied trusts ( down 0.9 per cent) and lead­ers ( down 0.9 per cent) lagged the in­dex.

The sec­tor is trad­ing at a 3 per cent pre­mium to our es­ti­mated fair mar­ket value ( from a record dis­count of 14.3 per cent in Septem­ber 2003 and 9.1 per cent dis­count dur­ing Au­gust 2007).

In mar­ket news, the res­i­den­tial sec­tor con­tin­ued to strengthen with build­ing ap­provals up 6.8 per cent in Septem­ber, un­der­pinned by solid de­mand. Hous­ing In­dus­try As­so­ci­a­tion data on new home sales re­vealed a solid 9.9 per cent rise for Septem­ber, up from an 8.6 per cent fall in Au­gust.

The Re­serve Bank’s 25- ba­sis point in­ter­est rate rise this month may ease some of the strength in this mar­ket in the short term.

There had been strong de­mand in the re­tail sec­tor for prime shop­ping cen­tres given a favourable macro- eco­nomic back­drop which has driven re­tail sales. Low un­em­ploy­ment, solid in­come growth and tax cuts have also fu­elled con­sumer de­mand. For Septem­ber, re­tail sales rose 0.8 per cent.

The of­fice prop­erty mar­ket is also healthy with the mar­ket spec­u­lat­ing on what price will be struck for big as­sets now on the sales block.

Morgan Stan­ley is sell­ing $ 1.3 bil­lion of sec­ond- grade of­fice as­sets owned by the now­pri­va­tised In­vesta, while Queens­land In­vest­ment Cor­po­ra­tion is mar­ket­ing the $ 800 mil­lion- plus Queens­land Cen­tral Plaza com­plex in Bris­bane.

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