Deutsche listed property put on hold

Investment research housevan Eykhas placed a ‘hold’ rating onDeutsche Asset Management’s capabilities in the listed property trust (LPT) sector.

The ‘hold’ rating comes after Deutsche dropped the performance target for its headline listed property trust, the Deutsche Paladin Property Securities Fund, from 1.5 per cent to 1 per cent before fees and taxes.

The revised performance target was prompted by an internal review by Deutsche of its management of the listed property trust sector.

According to van Eyk, while the lower performance target still leaves Deutsche in line with other LPT managers - Colonial First State and Macquarie target 1 to 1.5 per cent, while ING and Rothschild target up to 2 per cent - it indicates a degree of insecurity about Deutsche’s continuing ability to outperform in the sector.

“We believe the direction of the change signals the lower confidence that the manager has in achieving their stated targets,” van Eyk says.

Van Eyk says Deutsche’s uncertainty in the LPT market coincides with its burgeoning funds under management in the sector.

Deutsche Asset Management manages some $1.9 billion in listed property trusts, almost five per cent of the whole market, suggesting the group may have to contend with its position in the market affecting the market itself, according to van Eyk.

The ‘hold’ rating by van Eyk also follows a number of personnel changes at Deutsche.

Greg Paramor, a consultant to Deutsche Asset Management in the listed property trust area, is no longer working with the group because of a conflict of interest arising from his involvement with other listed property trusts and companies.

Adrian Harrington, who was employed as an investment specialist covering Australian equities, but who was also involved in the longer term research on LPT’s at Deutsche, has also left the group.