Global LPTs tipped to become norm
Most new property trusts in the next 12 months would feature overseas property as the famine of good quality Australian properties coming to market continued, a prominent property manager has predicted.
Centro Properties Group senior funds manager Bryce Mitchelson said with property yields for retail in Australia about at 6 per cent and commercial borrowing at about the same rate, the economics of putting domestic property in trusts wasn’t stacking up.
“We can get higher returns in the US where yields are between 6 to 7 per cent and interest rates are about 4 per cent,” he said.
Managed Investment Assessments director Anton Lawrence said he expects to see several new trusts this financial year with overseas assets.
“We are seeing a number of managers have a dabble with overseas property and some will be more hybrid-type products that will be a mixture of property securities and some direct property,” he said.
Mitchelson said stamp duty and the NSW vendor tax was also limiting local property purchases by managers. This was a major factor in Centro’s recent move to transfer a number of Australian shopping centres into its new listed property trust, rather than consider selling them.
Lawrence agreed the NSW vendor tax is severely limiting property transactions in the state and hence managers are looking further a field.
“When the legislation allows retail property trusts to be established in the UK I suspect we will see some new trusts with property from there and similarly Europe,” he said.
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
