Unfortunately, Centro isn’t the only trust operating under the same model. Here is what to watch for…
Centro: Not the last
Anyone who had been listening to me would not be in trouble now. For the last 12 months I have been clearly stating that investors should be avoiding highly geared property trusts that were investing a lot in overseas assets.
Every week I have been telling investors to be very careful and avoid this type of indirect investment in large managed trusts. Although I did not refer to Centro I made a point of telling people to avoid this type of investment.
There are unfortunately a number of other trusts with the same model.
I remind people to ask some simple questions. How much property in the portfolio is passive? How much is being developed? Make sure at least 60% of the assets are local assets. Again about 60% of the property should already be developed and leased, such as shopping centres and office blocks.
Also look at the skills of the management. How expert are they? How high is their gearing?
And don’t fall for the excuse that property trusts trot out – that the opportunities in Australia are not good and that’s why they are buying overseas. There are plenty of opportunities in Australia, as we are growing very quickly, and there is demand for new infrastructure.