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Shaky future for property sector as owners head for the exit |
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carolyn cummins the age.com.au 26, march 2008
MANAGERS are warning that the outlook for the property sector is unclear as portfolios worth $4 billion-plus are being prepared for sale to anyone who has the cash to buy.
Last year, property transactions were valued at a record $14 billion-plus, but with the global credit crisis deepening, almost a third of that is being offered back to investors, through on and off-market deals.
But vendors are having trouble finding buyers who can raise the cash to buy in these tight times.
Perpetual Investment's head of direct property, Goran Ujdur, has warned that for the highly geared trusts — most in the S&P/ASX 200 property trust index are geared at more than 50% — things will get uglier before they get better.
"Buyers are smelling blood, so they are sitting on the sidelines and waiting," Mr Ujdur said.
"Many of these vehicles will have to sell good assets just to stay afloat."
The assets being offered so far are A-grade office towers across most capital cities and large and small shopping centres excluding, for now, the Centro properties held in its two unlisted wholesale funds, and a smattering of defence land for redevelopment.
There are also the sales by MFS of its Sheraton Mirage Resort, Mirage Country Club and Golf Course, the Bale Resort and two development sites. Recently listed hotel group Hedley Leisure Group, controlled by Cairns businessman Tom Hedley, is said to be looking to offload its $1.2 billion pub empire.
Retail landlord Centro and the Allco-managed property trusts have $2.2 billion and $1 billion of Australian property up for sale respectively, although some of the assets are in trusts that need to be unwound to make sales more palatable.
Mr Ujdur said cash was king, so superannuation funds, sovereign wealth funds and cashed-up private investors who had sold major portfolios in the past two years would be in a strong position to buy good assets at reduced prices.
For more information: http://business.theage.com.au/shaky-future-for-property-sector-as-owners-head-for-the-exit/20080325-2
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