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    Listed property companies values shredded amid hefty falls in property values Nicole Lindsay From: Herald Sun December 04, 2009 12:00AM 39 commentsIncrease Text SizeDecrease Text SizePrintEmail Share
    Add to DiggAdd to del.icio.usAdd to FacebookAdd to KwoffAdd to MyspaceAdd to NewsvineWhat are these? A Nakheel construction site is seen on The Palm Jumeirah development, also known as Palm Island, in Dubai Source: Bloomberg
    Listed property suffers heavy falls
    Property companies raised $15.6bn during year
    "The worst is behind us"
    INVESTORS in listed property companies saw their investment shredded by an average 55 per cent during the 2008-09 financial year with only four companies posting a positive return, according to the BDO Group's A-REIT Survey.
    And despite hefty local falls in property values, the best performing A-REITs were those focused firmly on local investment assets, with foreign investments dragging down results.

    BDO national corporate finance director Sebastian Stevens said "the stats for the 2009 period is not a great tale -- 2009 was pretty bad but things seem to be turning." "Our feeling is the worst is behind us. There's been a massive increase since then and the securities are up about 60 per cent since the low in March," Mr Stevens said.

    The S&P/ASX 200 A-REIT index fell to a low of 546.9 in March this year, a long way from the 2489.7 peak in October 2007. Yesterday the index reached 855.3, off its October high of 962.2.

    BDO's survey analysed the financial results of 58 listed property companies and found the three top performing unit trusts for the 2008-09 year were ING Real Estate Healthcare, the Chadstone and Northland shopping centre-owner Colonial First State Retail Trust and the Bunnings Warehouse Property Trust.

    BDO separately analysed the performance of stapled companies and selected the former Macquarie Leisure Trust -- now called Ardent Leisure -- as the best performer, followed by pub-owning ALE Property Group and Cromwell.

    Heavy hitting companies, Westfield and Lend Lease were ranked seventh and eighth respectively while Stockland came in 13th.

    Australian property companies raised $15.6 billion during the year, most of which was used to pay down debt levels.

    "But the average level of gearing went up to 46 per cent from 44 per cent so the amount they raised was absorbed by the fall in asset values," Mr Stevens said. "Had it not been for capital raisings gearing would have increased further."

    Some companies are still struggling with debt. Brisbane-based developer Devine admitted this week that it had breached its banking covenants with the ANZ.

    BDO's survey showed that 91 per cent of the 58 companies recorded an average 16 per cent fall in property values; about 40 per cent of those companies declared writedowns of more than 20 per cent and Macquarie DDR Trust, which owns US properties, recorded the largest, a 44 per cent writedown.

    The industrial sector was hit hardest by writedowns and lost 28 per cent of its value whereas the development sector, with its landbank holdings, was forced to write off only 10 per cent.

    Nearly all of the property companies are trading at a hefty discount to net tangible assets of 46 per cent.
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