Fund managers, super funds and insto's want an LVR of 40-45% in line with your Stockland's and your Westfield's. It's that simple. At this LVR level the big players are in. Any higher and they're nervous and have been for quite a while
They have to be...propertyfunds (ordinary money and super money) have very specific mandates, so if Centro comes out of these issues and brings it's LVR in line then the fund managers will be on board.
From a funds management perspective, in the property sector in Astralia there is a very unique issue that plagues fund managers.....diversification. Effectively Westfield has 33% of listed property in Australia, so fund managers with tight mandates have major diversification issues. Consider a property fund that is required to provide its investors with a broadly diversified portfolio where and if possible. Any investment is weighted 1/3 to Westifeld.
They need access to alternative listed trusts like Centro, GPT, Stockalnds and the like. Centro going down only reduces the ability for these funds to diversify to the point where the Aussie listed property market almost an oligopoly.
This already is a problem with funds running very tight madates, and many of their property holdings have been sold down in favour of diversification in Singapore and the UK and suchlike. MLC is a classic example of this as they sold down a lot of their Aussie listed property some months ago in favour of acquisitions of listted property stocks overseas.
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