Research house Lonsec has released its annual review of the property securities sector, describing the final quarter of financial year 2004 as a defining moment for listed property trusts, but warns the sector is in the midst of a major transformation.
The Lonsec research found that despite the variety of styles and organisational structures in the marketplace, having just two entities (Westfield Group, Lend Lease/GPT) comprising more than 50 per cent of the LPT market makes it unlikely that active managers will be able to consistently add value.
According to Lonsec, US domiciled assets now make up 25 per cent of total trust assts and gearing has jumped from 10 per cent to 30 per cent over the past decade.
Lonsec says managers are disadvantaged if they are unable to obtain reliable information on US domiciled assets.
Investors in the LPT sector should be aware of higher investment risks and expect more volatile returns in light of this increased exposure to US assets as well as associated currency implications.
Of the 17 Australian property securities funds managers rated, four received Lonsec’s highest rating of ‘highly recommended’.
The review included one new manager — Perpetual James Fielding — which received a ‘recommended’ rating.
Of those rated in 2003, Lonsec has kept 10 managers’ ratings unchanged, upgraded three managers and downgraded three.
