Dow Jones Adds Centro To Australian Index

Sydney Morning Herald

Wednesday July 13, 2005

Edited by Carolyn Cummins

Dow Jones Indexes has added the Centro Property Group to the Dow Jones Australia LPT Index. The component change was caused by the retailer's decision last week to spin off its Centro Retail Trust.

The addition brings the number included in the index to 16.

Centro Retail Trust will be considered for possible inclusion in the index at a quarterly review in September.

Dow Jones Australia LPT Index tracks the performance of listed property trusts on the Australian Stock Exchange and represents 90 per cent of the capital of listed property trusts.

Centro's inclusion comes as brokers update their earnings forecast for Centro to reflect the spin-off of Centro Retail Trust.

Deutsche Bank's property team said Centro Retail Trust appeared to be more of a retail product that would offer an initial yield of 8 per cent, significant tax advantages and would be a "pure" US/Australian retail investment vehicle.

"However, the relatively high leverage [58 per cent balance sheet debt] and significant control mechanisms are features analogous to an unlisted syndicate." The team said it believed the trust's share price had run ahead of fundamentals and maintained its 'sell' recommendation."

ABN Amro's property analysts said the spin-off of Centro Retail Trust created significant value and generated a 7 per cent increment to the 2005-06 distribution per unit. Despite concerns regarding the stock's valuation, the analysts changed their recommendation from 'reduce' to 'hold'.

© 2005 Sydney Morning Herald

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