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Australian Property Trusts Being Pressured to Divest International Assets

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HAVING embarked on an international spending spree over the past three years, Australia's bruised and battered listed property sector could be forced into a fire sale of its $70 billion offshore portfolio, after being caught up in the global economic slowdown.

Confronted with falling rental income and under increased pressure to reduce borrowings, the potential number of retail properties that local trusts might have to sell in the US is "huge", according to leading US research group Real Capital Analytics.

Australia's listed property trusts -- which have 40 per cent of their assets offshore -- bought $US20 billion ($20.8 billion) worth of US shopping centres between 2005 and 2007.

"Over that period they acquired one out of eight strip shopping centres sold," said Real Capital in its June Capital Trends Monthly publication.

"All Australian REITs (real estate investment trusts) are under pressure to sell and many of their non-US assets have recently been up for sale."

A large swag of those recent acquisitions was made by the debt-laden Centro Properties Group, which is currently surviving on the goodwill of its banks.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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