Florence Chong | April 09, 2008
THE Melbourne-based APN Funds Management has reopened a property fund, closed to new investors since 2005, to raise money to invest in listed property trusts.
The fund manager is also making a capital raising for an unlisted fund, known as APN Champion Retail Fund, to purchase retail assets in Europe.
"We believe the listed sector has bottomed out," APN head of investment Michael Doble said.
He said yields from listed property trusts had improved from about "mid-5 per cent" to 8 per cent since the collapse of the equities market. "Yields have returned to the sector's long-term average," he said.
The yield improvement meant that it would again be profitable to invest in the sector.
The trust, APN Property for Income Fund (PFIF), which managed $1.2 billion, was established in 1998, but the manager decided in 2005 to stop accepting new fund inflows because the listed sector had become too expensive.
Based on the level of inquiries from financial planners in recent weeks, Mr Doble sensed there was "exceptionally strong" interest from investors in property.
Over the past decade to March, the trust had returned an average of 13.25 per cent each year.
Mr Doble said investors realised that property was a long-term asset class and should not be judged on its three-month or 12-month performance. "It needs to be judged over a period of five to 10 years," he said.
While the industry expected property values to fall, recent sales appeared to have held their value. "We are not seeing a full-blown property crisis," he said.
"When liquidity returns to the commercial mortgage-backed security market, we expect the listed trusts to normalise."
Meanwhile, APN has raised $30 million for its new Europe fund, launched in February.
APN head of Europe Funds Charles Raymond said there were signs of renewed investor confidence in recent weeks, prompting him to extend the closing of the capital raising.
The manager aimed to raise $56 million to buy 16 supermarkets in Greece, leased to leading French retailer Carrefour.
The assets are held on the balance sheet of the listed APN Euro Property Fund.