Investa's impeccable timing ahead of gloomy forecasts

INVESTA has cashed in on the current demand for industrial property by selling all four remaining properties within the Investa First Industrial Trust to a trust managed by ANZ Bank.

The industrial buildings at Castle Hill, Sydney; Dandelong, Victoria and Salisbury, Queensland, follows a strategic review of the fund that was Investa was foreshadowed in the original Investa prospectus.

IFIT’s fund manager Paul Cull said he successful sale of the properties lifts total returns to unitholders since inception to 14.5 percent per annum.

“This is a strong result given current market conditions and compares to initial forecast returns for the fund of 9.5% at inception growing to 11% in 2007. The price received for the assets were in excess of their book value.

“The strong market conditions, at the time of sale, provided an opportune time to crystallise profits for the unit holders of this closed end retail fund,” he added.

A recent Advisers Edge report predicts the industrial property sector will slow in 2008 due to growing unease over the state of the Australian economy. This will be evidenced in decelerating rental growth and yield softening.

According to Advisers Edge, industrial property capital values will undergo moderate increases in 2008, with a range of between 4%–8% expected across the eastern seaboard states – compared to double digit growth in 2007.

The decline of the industrial sector is expected to take full effect in 2–3 years time. This year, will see the heat come out of the industrial property market in Brisbane, Melbourne and Sydney.

The report predicts this will be a general slowdown, with growth in most states capital values, rental increases and total returns down on 2007 figures. However, the continued momentum should be sufficient to see results remaining in positive territory, with total returns exhibiting a range of between 12%–15%.

The effects of the slowdown are predicted to take a firmer grip moving into 2009. Warehousing supply is expected to reach saturation point. Across all states, yields will continue to soften as investors become more selective and price conscious. Overall, we believe that total returns for industrial property will fall to 10.8% in 2009.

Meanwhile, Investa now plans to wind the trust up following the sale and is offering all IFIT unitholders an opportunity to re-invest with the group in its open retail fund Investa Diversified Office Fund.

Australian Property Journal