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AEZ European Retail Property Trust - Sell AEZ.

After the market closed yesterday, AEZ European Retail Property Trust (AEZ) announced a reduction in their distribution guidance for the year - again - to 6.11 cents. This is very disappointing given that just two months ago, the company issued comprehensive 'supplemental' information to the market detailing why, amongst other things, the new distribution guidance was sound.

Although the stock now trades on a forecast dividend yield of over 20%, we believe the forecast cannot be relied upon. While there may not be much downside from these low levels, the stock could move sideways for a considerable period of time.

There is also a risk that the fund will require an equity injection, which will be dilutive and put further pressure on the share price.

We got this call badly wrong. We have very little exposure to property and reasoned that property markets offshore (Europe) offered better value than in Australia. While this may have been the case, the financing of those assets was the same (too much debt) and the conservative property valuations did not provide protection.

With the washout of the listed property trust sector ongoing, we believe waiting for a recovery could prove futile. We recommend Members sell AEZ. The stock will be removed from the Fat Prophets portfolio for a regrettable loss.








Best Regards,

Fat Prophets
Investment Heavyweights