Private players give hope for trust sector Carolyn Cummins Commercial Property Editor December 18, 2008
IF 2008 was one of the toughest years for the real estate investment trust sector, the coming year may hold some glimmer of hope, given deals conducted in the past week.
In a number of moves undertaken yesterday by Stockland, FKP, Valad and Investec, the underlying message was mixed, with private players buying but in a very weak climate.
One bright spot was the rise in Centro's units by 26.4 per cent to 11c after its bankers agreed to a rescue package.
However, Stockland, the largest diversified listed real estate trust, was the latest victim of the harsh environment with a warning that its earnings per share for 2008-09 will be cut from the current forecast of 46.7c to 35c, to reflect the tightening market conditions. Its previous forecast of a full-year profit of about $620 million remained on track.
In a series of moves following another review of the business since October, Stockland has written down the book value of its residential inventory by 5 per cent, or $105 million, shelved some proposed development projects and stepped away from making any further deals with its strategic interests in GPT, FKP and Aevum.
One analyst said Stockland decided to stall its move on FKP because it was seeking more time to fund the acquisition. The analyst said that Stockland cannot issue scrip to FKP because FKP needs cash, and it would be reluctant to fund it with existing balance sheet capacity.
FKP's managing director, Peter Brown, said it would conclude a transaction with Stockland, or any other party, in relation to its retirement assets only if such a transaction could be demonstrated to be in the best interests of the company's security holders.
Stockland's managing director, Matthew Quinn, said yesterday that the group would also stop any more investment in the British division, which has suffered a write-down in earnings, and will actively pursue more asset sales in its commercial and retail operations.
Mr Quinn confirmed the sale of its Edmund Barton Building in Canberra for $186 million on completion of its redevelopment. It is understood that the German firm Realis was the buyer through CB Richard Ellis. In contrast, Valad raised $138.4 million through the sale of 26 properties across New Zealand and Australia, and its portfolio of eight Nordic Aktiv Fund, to a number of private investors and self-managed super funds.
VPG Price at posting:
3.8¢ Sentiment: Buy Disclosure: Held
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