Property funds and Australian real estate investment trusts (REITs) have been under siege for months, but there may be some light at the end of the tunnel.
With doomsayers prophesizing big downgrades to the values of office towers and their shares trading at up to 25 per cent below their net asset values, the property players have received a much-needed vote of confidence from J.P Morgan.
The investment bank has lifted its outlook for the five ASX-listed REITs, signalling what may be a turning point for the listed property sector. J.P. Morgan’s analyst Richard Jones reckons the sector sell-off, driven by an accelerated move in the 10-year bond yield, is “overplayed”. He says there’s “compelling value” in the market.
However, Jones’ optimism remains out of sync with consensus. According to property advisory and research group Par Group, a further $15 billion could still be written off from values of office and shopping centre assets.
More stress is expected to emerge in commercial property sector.Credit: Bloomberg
With listed property owners having so far had some $2.5 billion wiped off their books, Par Group says there is more pain ahead. The $2.5 billion equates to a 5 per cent cut in the value in office assets and the cuts are in stark contrast to the limited sales being made.
The biggest problem in assessing real property values is the lack of sales above $50 million.
Many of the funds and the big institutions appear unwilling to test the market. Meanwhile, potential buyers are sitting on their hands, preferring to wait and see where post-COVID valuations settle.
As one commercial property agent, who asked not to be named because of the sensitivity of the matter, put it: “It’s a stalemate. While office owners can handle rising interest rates and partly empty buildings for a while, the reckoning will come. At some point, they will have to confront their demons”
The impasse between buyers and sellers has made it difficult for equity investors to assess the potential of listed property companies – and they have been avoiding them in droves.
Will big commercial property players ‘confront their demons’?
9
0
15.11.2023
Property funds and Australian real estate investment trusts (REITs) have been under siege for months, but there may be some light at the end of the tunnel.
With doomsayers prophesizing big downgrades to the values of office towers and their shares trading at up to 25 per cent below their net asset values, the property players have received a much-needed vote of confidence from J.P Morgan.
The investment bank has lifted its outlook for the five ASX-listed REITs, signalling what may be a turning point for the listed........
© The Sydney Morning Herald
visit website
login
who are we?
contact us
qosheapp
Toi Staff
Gideon Levy
Belen Fernandez
Andrew Mitrovica
Mort Laitner
Rami G Khouri
Ali Fathollah-Nejad
Nikkei Editorial
