Turi Condon From: The Australian August 07, 2010 12:00AM
MANAGEMENT of some of Australia's listed property trusts have been motivated by selfishness and self-preservation.
That is the view of Resolution Capital managing director Andrew Parsons, who oversees $1.6 billion of Australian and global real estate trust investments. He says in the group's latest quarterly report that although balance sheets have been restored and Australian property values are past their trough, a number of REIT managers destroyed value for unitholders.
He singles out some of Australia's listed office trusts, pointing out net tangible assets per unit of Charter Hall Office REIT (which was managed by Macquarie Group until early this year) has fallen by 50 per cent from 10 years ago.
Other listed property trusts, share prices of which were more than 30 per cent below their NTAs at June 30, include Valad Property Group, ING Industrial Fund and Aspen Group.
"Many A-REITs trade at discounts to assessed NTA, being punished for poor long-term performance and inabiltiy to explain why it will be different in the future," Parsons says.
He has reduced his fund's international holdings, seeing some value in A-REITs where, he says, the outlook is relatively robust with the sector rid of a number of lower-quality operators and dividends recalibrated. He argues that while there are signs of promise, and there is "deep value", problems are deeply entrenched.
"We suspect the motives for REIT management that continually fail their shareholders include selfishness (particularly those externally managed REITs remunerated by gross asset value), self-preservation (to limit takeover attractiveness) and incompetence," he says.
VPG Price at posting:
$1.98 Sentiment: Hold Disclosure: Held
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