Privateers to pounce on trusts

Privateers to pounce on trusts
Email Print Normal font Large font June 2, 2007

According to John Kriz, managing director real estate finance for Moody's Investors Services, "private equity is coming to a trust near you".

This was evidenced on Thursday with the $4.7 billion takeover of Investa Property Group by Morgan Stanley Real Estate group.

In Sydney for the Property Council of Australia's Capital Markets conference during the week Mr Kriz said two types of LPTs attracted private equity players.

"The first is a group whose stock price has been lagging and is in need of a cash injection or some direction. The other is firms that are relatively diversified, maybe trading at a discount and which have trophy assets that private equity players have identified to cherry-pick," Mr Kriz said. "But with the increased cash comes increased risk which all investors should be aware of."

Mr Kriz said that since attending the same conference a year ago the major changes to the LPT sector were the number of groups now owning assets based offshore and the interest in the local market by private equity players.

"I see a continuation of these themes as well as more Australian money going offshore to the less traditional, yet burgeoning, property markets of Malaysia, as well as the traditional Europe and Asia. But as more markets open up Australian LPTs must realise there are more players in the scrum. The Aussies are not the only players in town."

Peter Mitchell, chief executive Asian Public Real Estate Association, who was also in town for the conference, said South Korea, Indonesia and India were also emerging markets in the global property world.

"There are a number of real estate investment trusts (REITs) comprising Indonesia-based shopping centres that are looking to list, possibly on the Singapore Stock Exchange," Mr Mitchell said. "India is also looking at its regulations governing investments with the possibility to allow REITs, while Japan is also looking to list its own."

Mr Mitchell said there were a number of new Australian groups looking to grow their presence offshore through a direct listing on an Asian exchange or through joint ventures.