Australian REITs on the retreat after AUD$20b losses
Brisbane Times reports: Australian property trusts are unloading failed overseas investments from Munich to Michigan after piling up losses equal to almost a third of their market value in the last 12 months.
Westfield Group, the world’s largest shopping-mall owner by market value, and GPT Group, which last month announced plans to dump its overseas properties, are among the companies to rack up losses from foreign ventures.
The 16 members of the S&P/ASX 200 A-REIT Index reported combined losses of $19.5 billion and writedowns of $21.7 billion in the year to June 30, according to data compiled by Bloomberg.
Australia’s $1 trillion in pension savings helped fuel a global buying spree from companies such as Centro Properties Group that saw the nation become the biggest overseas buyer of US property from 2005 to 2007. That backfired when property values tumbled and borrowing costs spiked because of the credit crunch, forcing companies to write down and sell offshore assets and replenish balance sheets ravaged by losses.
Buying spree
Australians spent twice as much as Middle Eastern investors on US real estate from 2005 to mid-2007, and almost three times more than Germans, according to New York-based Real Capital Analytics, a provider of data on the global commercial property market. That investment into the US "evaporated" in 2008, according to an April report from the industry researcher.
Among the biggest buyers was Centro, which last year handed control to banks after failing to refinance $5.1 billion of debt accumulated as it acquired 650 US malls.
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Posted by: Matthew Stone