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LPTs

Discussion in 'Real Estate' started by Tzaki, 18th May, 2006.

  1. Tzaki

    Tzaki Well-Known Member

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    20th Sep, 2005
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    Canberra
    I am looking at going into LPTs as away of getting into commercial realestate. Iwas wondering if any of you have any experiences that you would like to share? :D
     
  2. Nigel Ward

    Nigel Ward Team InvestEd

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    Commentary I've read about the LPT sector suggests three things to me - but I haven't done detailed research.

    1) there is a negative correlation between equities and LPTs so LPTs should outperform when the remaining sharemarket is weak and vice versa.

    2) people are suggesting that despite 1) the LPT sector is "fully priced" i.e. there's no bargains at the moment. I don't know if that is true or not.

    3) the risk profile of the LPT sector has changed. No longer is it a safe boring income producing growth asset class it once was. Some LPTs now contain considerable development risk and have bought massively into unfamiliar markets. I guess whether that will be a good or bad thing will take time to work out.

    Just some musings. As I said I've not looked closely at the sector for some time. Let us know what your research digs up.

    Cheers
    N.
     
  3. -T-

    -T- Well-Known Member

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    Someone that has taught me a lot recently said that if I was looking at commercial LPTs again, try to find one that:
    - doesn't develop
    - has long term leases
    - has good past performance

    Whether that is good advice is another story.

    I still hold Macquarie Goodman, but only 4 shares. When I sold I got the number mixed up and was left with four. Brokerage is obviously too much to get rid of them, hehe. :rolleyes: I have made about 50% and made good divs on those four though. :eek:
     
  4. Glebe

    Glebe Well-Known Member

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    That's funny.
     
  5. gekko_99

    gekko_99 Member

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    I've done no research into it but why would commerial property trusts have a negative relation to equities. I would imagine that an if equities had an extended period of pull back their underlying demand for accommodation would also pull back.

    My guess is that the leases on property within the trust tie them in until lease expiry and that the fund manager should be able to envisage potential vacancies and seek new tenancies prior to expiry. Trusts also tend to hold large property which might be hard to lease in a weak economic environment particular a large single tenant industrial property for example more so than maybe a multi tenant retail centre with strong anchor tenancies.

    I would imagine a correlation between the two but maybe a lag in the LPT sector as lease options and expiries fall due. Possibly LPT's would seek to structure lease expiries with predicted economic cycles so that vacancy risk would be a in strong period and that may be thats the negative correlation.

    I'm only guessing but I'm having fun.
     
  6. Rickson

    Rickson Well-Known Member

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    23rd Oct, 2005
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    Why not trade LPTs? GPT, fairly safe I think, has traded in a range of 4% plus in the last little while.
     
  7. -T-

    -T- Well-Known Member

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    Do you mean return pa is 4% or volatility is 4%? Talking abuot it being safe leads me to think volatility, but you said 4% plus, which leads me to return.
     
  8. Rickson

    Rickson Well-Known Member

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    Volatility. GPT has moved within a range of $4.01 and $4.18 during the last 7 trading days. It reasonably frequently has a range of 2% or more in a day.