Why Invest in LPTs
What is a Listed Property Trust?
Listed Property Trusts (LPTs) are professionally managed portfolios of property that are listed on the Australian Stock Exchange (ASX). Investors gain exposure to both the value of the properties that the trust owns and the regular rental income generated from the properties. Units or securities in LPTs can be bought and sold on the ASX through an accredited stockbroker in the same way as direct shares.
LPTs are one of the largest sectors on the ASX and currently comprise 12% of the world's listed real estate assets (source: www.asx.com.au/propertytrusts).
LPTs Managed by Centro
Centro manages two retail LPTs:
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Centro Properties Group (ASX Code: CNP) – With funds under management of $22.6 billion, CNP owns and manages over 750 shopping centres in Australasia and the United States. As a stapled security, CNP gives investors exposure to both the property ownership business (which currently generates the majority of income for CNP) as well as the services business. The services business includes funds management, leasing, development and property management activities and provides an important opportunity to maximise returns to investors through increased earnings growth.
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Centro Retail Trust (ASX Code: CER) – CER was listed on the ASX in August 2005 and comprises ownership of Australasian and US retail properties valued at $8.3 billion. CER’s property portfolio of 452 high quality shopping centres is focused on non-discretionary spending. The investment philosophy is to provide investors with access to pure retail property ownership, together with conservative long term interest rate and foreign exchange risk management.
Features of LPT Investments
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Regular Income Stream – According to the ASX the distribution yields on LPTs typically vary between 5%-10% a year, with distributions made either quarterly or half yearly allowing investors to regulate their cash flow.
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Lower Levels of Volatility – As part of a balanced portfolio listed property can provide diversification benefits due to its low correlation with the share market. The LPT sector has been found to be less volatile than the general share market (source:
www.asx.com.au/propertytrusts);
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Diversification – Diversification benefits can arise through exposure to a broad and different range of property, retailers, economic markets and the potential for different economic cycles;
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High Liquidity & Low Minimum Investment – As LPTs can be bought or sold on the stock market they offer high liquidity, with the proceeds of sales being typically received within three days. The minimum investment is $500 (the minimum marketable parcel of shares);
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Tax Advantages – LPTs can offer investors certain tax advantages through access to tax concessions such as depreciation and building allowances. These tax concessions are effectively passed through to investors as tax deferred income. Generally tax deferred income is not taxable when received, but is deferred until the investment is sold.
How to Invest
Securities in CNP and CER can be easily bought on the ASX in the same way as direct shares. Simply contact your financial adviser, stockbroker or an online broker. Please visit the ASX website for a list of participating stockbrokers on the ASX. You should obtain independent advice from a professional adviser prior to making a financial or investment decision.
Further Information
For further information about investing in CNP and CER please contact Centro Investor Services on 1800 802 400 or email investor@centro.com.au
For further information on investing in LPTs please visit the ASX website:
Listed Property Trusts: www.asx.com.au/propertytrusts
Listed Managed Investments: www.asx.com.au/lmi
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