LPTs to have more subdued success in 2003

While the listed property market escaped the clutches of the bear which has ravaged the Australian share market in the 2002 financial year, its double digit returns for the 2002 financial year are unlikely to be repeated in the 12 months to the end of June 2003, according to fund managerAusbil Dexia.

Listed property posted an indexed return of 14.9 per cent and only one trust out of 27 in the index pulled up in the red in the financial year just concluded, according to Dexia.

The listed property benchmark return outpaced theASX/S&P 200 Accumulation Index by almost 20 per cent, with the latter falling 4.7 per cent below zero.

Broken down into their sub-sectors, industrial property made 21 per cent; retail was up 16.6 per cent; diversified property achieved 14 per cent; while commercial property was up 12.8 per cent.

The only blemish on the listed property records was found in the sub-sector of hotels, which took a hiding, with a loss of 12.3 per cent. This was largely due to the poor performance of one trust, the Grand Hotel Group, which lost 37.3 per cent.

Other poor performers, but comparable to the ASX/200 Accumulation Index yearly achievements, wereDeutscheOffice Trust, making 3.8 per cent,BTOffice Trust with 6 per cent, andAMPOffice Trust, which made 6.4 per cent.

At the other end of the scale, a handful of trusts got over the 25 per cent mark in terms of performance returns. Centro Properties Group hauled in 32.9 per cent in returns, while Deutsche Industrial Trust was next with 28.9 per cent, followed by Lend Lease Office Trust and Westfield America Trust with 28.8 and 26.6 per cent respectively.

Despite the strong showing for 2002, Ausbil claims the results are unlikely to be repeated for the next year. It gives as its reasons that short term interest rates are expected to rise and bond yields moving up from current levels.

“The pressure from interest rates may come a little later than anticipated. Bond rates are expected to peak next year at around 6.5 per cent and while generally high interest detract from investing in LPTs, the shift out of defensive positions by institutional investors may be slower because of the uncertainty surrounding equity markets,” Ausbil deputy chief investment officer Winston Sammut says.

Ausbil forecasts returns hovering around 8 per cent for the next year.