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21-09-2014, 11:42 PM
'Disconnect' in office sector
Matthew Cranston
393 words
18 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
The former head of Australian real estate at investment giant BlackRock, Paul Healy, has given a gentle warning to property fund managers about the growing disconnect in Australia's commercial real estate market.
"I do have mild concerns, but the unknown question is whether this is a structural shift in investment returns," Mr Healy said.
As the current chief executive of the Property Funds Association – the peak body for $79 billion in unlisted commercial property – Mr Healy's views are closely monitored by fund managers.
"The only disconnect in the market is in the office sector where incentives are stubbornly high," he said.
"At the same time you have very large investment in the sector at very low yields.
"However, what tends to happen is that the incentives are wound back sharply and the structured leases in place include increases in rent.
"I think a lot of the offshore money is taking a long-term view."
Mr Healy emphasised that he did not think there was any comparative disconnect in retail assets.
A year into his role at PFA, Mr Healy said he was keenly looking to improve the professional standards of the industry, which suffered some reputation setbacks during the financial crisis.
He said he had now met with executives from the Australian Securities and Investments Commission, such as commissioner Greg Tanzer, on a number of aspects including disclosure, distribution policies, acquisition costs, net tangible assets and debt-related issues. "The discussions have been harmonious," Mr Healy said.
Mr Healy made the comments on the sidelines of the PFA's Property Funds Roadshow event in Brisbane on Wednesday, where groups such as LaSalle Investment Management indicated a further push for commercial assets in Australia.
Other fund managers present, including Sentinel Property Group founder Warren Ebert, aired their concerns about the residential property funds and the commissions being paid for selling product in a heated housing market.
"People offering residential investments should declare what the real returns are," Mr Ebert said.
He said the returns being flouted in residential investments were only given in gross terms, when they should be given in net terms.
"They are only given gross returns because there are such big commissions being paid," he said.
"I think it's a con – it's a disgrace and it needs to be changed."
Fairfax Media Management Pty Limited
Document AFNR000020140917ea9i0005j
Matthew Cranston
393 words
18 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
The former head of Australian real estate at investment giant BlackRock, Paul Healy, has given a gentle warning to property fund managers about the growing disconnect in Australia's commercial real estate market.
"I do have mild concerns, but the unknown question is whether this is a structural shift in investment returns," Mr Healy said.
As the current chief executive of the Property Funds Association – the peak body for $79 billion in unlisted commercial property – Mr Healy's views are closely monitored by fund managers.
"The only disconnect in the market is in the office sector where incentives are stubbornly high," he said.
"At the same time you have very large investment in the sector at very low yields.
"However, what tends to happen is that the incentives are wound back sharply and the structured leases in place include increases in rent.
"I think a lot of the offshore money is taking a long-term view."
Mr Healy emphasised that he did not think there was any comparative disconnect in retail assets.
A year into his role at PFA, Mr Healy said he was keenly looking to improve the professional standards of the industry, which suffered some reputation setbacks during the financial crisis.
He said he had now met with executives from the Australian Securities and Investments Commission, such as commissioner Greg Tanzer, on a number of aspects including disclosure, distribution policies, acquisition costs, net tangible assets and debt-related issues. "The discussions have been harmonious," Mr Healy said.
Mr Healy made the comments on the sidelines of the PFA's Property Funds Roadshow event in Brisbane on Wednesday, where groups such as LaSalle Investment Management indicated a further push for commercial assets in Australia.
Other fund managers present, including Sentinel Property Group founder Warren Ebert, aired their concerns about the residential property funds and the commissions being paid for selling product in a heated housing market.
"People offering residential investments should declare what the real returns are," Mr Ebert said.
He said the returns being flouted in residential investments were only given in gross terms, when they should be given in net terms.
"They are only given gross returns because there are such big commissions being paid," he said.
"I think it's a con – it's a disgrace and it needs to be changed."
Fairfax Media Management Pty Limited
Document AFNR000020140917ea9i0005j