Centuria Capital Ltd has abandoned plans to float a listed property trust after failing to raise the $215 million it needed, The Australian Financial Review reports. 

According to the newspaper, the group managed almost two thirds of its target, with CIMB Capital Markets, Macquarie Capital and RBS Morgans leading the raising.

The fund would have been seeded with the $300 million Northpoint office and retail tower in North Sydney before expanding, but investors were wary of a lack of portfolio diversity, the AFR reports.

By a staff reporter 

Charter Hall Group Ltd is tipping earnings growth of 7 per cent in the current year on expectations investors will seek to capitalise on the low cash rate by increasing their exposure to Australian property. 

Net profit in the year to June grew to $54.8 million, from $16.7 million in the prior year. The rise was largely attributable to a $42.5 million cash injection from profits of associates, which increased from $2.9 million in 2011-12. 

Revenues fell 7.1 per cent to $114.8 million in the year, from $123.6 million.  

It will pay a final dividend of 20.2 cents, compared to 18.2 cents last year.

Funds Under Management increased from $8.9 billion to $10.3 billion in the year on the establishment of new funds, including Charter Hall Direct Industrial Fund No.2, BP Fund, Core Logistics Partnership and Keperra Square Fund and a string of property acquisitions. The group was targeting growth in its Australian funds under management of 6 to 10 per cent per year.

Charter Hall‟s Joint Managing Director, David Southon said the group was forecasting growth of 7 per cent in operating earnings per security for the current year.

“Given the attractive yield proposition for property relative to other asset classes and having regard to our current low interest rate environment, we expect many investors - across both institutional and retail platforms – will continue to increase their exposure to Australian property," he said.

By a staff reporter 

Property investment firm Abacus Property Group Ltd says demand in the domestic real estate market is ignoring weak fundamentals, attributable to a slowdown in the office environment and an uncertain economic outlook.  

Net profit increased to $68.3 million, from $24.5 million the previous year, when the group took a $35.2 million hit on derivatives investments.  

When contributions from non-controlling interests were stripped out, net profit was $61.1 million, up on $8.5 million in the prior year. 

Revenues rose to $281 million in the period, from $236.1 million. 

Abacus has paid a final dividend of 8.25 cents.

By a staff reporter

Westfield Retail Trust Ltd has reiterated its full-year earnings guidance, despite a slight fall in interim profit.

In the six months to June 30, Westfield Retail Trust's net profit was $402.1 million, a 3.6 decrease on the $416.9 million recorded in the previous corresponding period.

In the same period revenue was $549.6 million, 3.4 per cent higher than the $531.7 million recorded in the same period last year.

The group will pay an interim dividend of 9.925 cents on August 30.

The group reconfirmed its full-year FFO forecast of 19.85 cents per stapled security, representing a 2.5 per cent increase on the prior year.

"While we anticipate that the retail environment will continue to present challenges, our focus will be on driving the operating performance of our quality portfolio to increase underlying cash flows," managing director Domenic Panaccio said.

"Together with the value generated by our redevelopment program and capital management initiatives, the trust is well positioned to create long-term value for securityholders."

AAP

Sales of new homes have fallen for the first time in five months but it is believed to be only a temporary setback.

New home sales fell 4.7 per cent July, seasonally adjusted, the Housing Industry Association (HIA) said.

HIA chief economist Harley Dale said there had been strong gains in housing construction earlier in the year.

"One monthly fall, while disappointing, does not really change the story," he said.

"That having been said, the re-emergence of a sustained decline for new home sales over the second half of the year would, obviously, be a negative signal for residential construction and the wider Australian economy.

"To be confident that actual new home construction will grow in 2013/14, we need to see clear and consistent evidence of further upward momentum in leading indicators such as new home sales."

Dr Dale said housing construction was still at quite low levels.

"It remains the case that detached house sales are running well below long-term average levels," he said.

Sales of new detached house fell 6.4 per cent in July, the first decline since February.

Sales of flats, townhouses and semi-detached houses were up 7.2 per cent in July, following a 17.5 per cent fall in June.

By a staff reporter

The RHG Ltd board has unanimously accepted the Resimac Syndicate's sweetened takeover offer, which values the target at almost $153 million.

In a statement to the Australian Securities Exchange, RHG said the syndicate would acquire all shares in RHG for cash consideration of 49.5 cents per share.

The offer was higher than the rival Pepper CDM proposal and provided more value certainty for shareholders, RHG said.

RHG entered a trading halt this morning ahead of the decision.

Earlier this week, Resimac again sweetened its takeover bid for RHG in an attempt to stymie a rival bid put by Pepper Australia and the target's largest shareholder.

The Resimac-led syndicate increased its all-cash offer to 49.5 cents per share, from 48 cents - which was already an increase of 3.9 cents per share over its original offer.

The move came after spurned suitor Pepper Australia joined forces with Cadence Capital, the largest shareholder of RHG, to put an increased offer of 49.65 cents a share, in cash and Cadence scrip.

The competing offers have both been made under schemes of arrangement. 

By a staff reporter

Shane Gannon will resign his role as chief financial officer of Goodman Fielder Ltd to take up the same position with Mirvac Group Ltd.

In a statement to the Australian Securities Exchange, Goodman Fielder said Mr Gannon will remain with the company until December and that it had already commenced the search for a replacement.

Managing director Chris Delaney thanked Mr Gannon for his contribution to Goodman Fielder.

“I am pleased that Shane will remain with the company over the next few months as we transition to a new CFO," he said.

Lend Lease is expected to sell all 159 of its planned luxury apartments in Sydney's Barangaroo development when they go on sale this weekend, the Australian Financial Review reports.

The newspaper said prospective buyers have each already paid $10,000 deposits to secure an appointment with one of the 20 CBRE agents, in order to purchase one of the apartments due for completion in 2015.

More than 600 people registered their interest in the apartments, with prices starting at $1 million for a one-bedroom apartment and $2 million for a two-bedroom.

The looming Coalition landside win on Saturday is now virtually certain to trigger a series of housing booms in Australia. In some areas the boom is not waiting for September 7.

The money markets are expecting another two rate reductions in the coming year. I no longer think that is likely. Indeed the chaos in Canberra appears to have thwarted the Reserve Bank’s attempts to stimulate the economy via interest rate reductions. Not realising what was happening, Reserve Bank Governor Glenn Stevens may have gone too far.

You will remember last month I alerted Australia to the likelihood of a post-election boom in housing caused by the unprecedented low interest rates coinciding with a change of government (Beware the mother of all housing booms August 13).

At the time a lot of people scoffed at the idea. But at the weekend I was in the company of one our larger outer-suburban homebuilders with operations in Brisbane, Sydney and Melbourne. In the last few weeks they have seen a level of inquiry rarely matched in their history. But unusually, the levels of inquiry did not see the normal level of agreements signed, even though the buyers were clearly ready to go. They just wanted to make sure that the current government really is going to be convincingly removed on September 7. The builder is then expecting an unprecedented avalanche of orders.

And over the weekend there were plenty of anecdotal signs that the uncorking of the residential building industry in Australia is happening. There was active demand for outer-suburban land in Sydney and Melbourne at the weekend and the demand for inner-suburban dwellings continues to be very strong. There is keen competition between buyers at auctions.

In Melbourne there is a large supply of apartments but in Sydney the supply is much more restricted. Sydney’s largest apartment owner and developer, Harry Triguboff, is frightened of a price explosion and is selling some of his investment apartments onto the market. He is stepping up the purchase of apartment land (Putting a lid on property exuberance, August 21).

Once the current stock is exhausted, the price rises could accelerate in some areas because the banks are squeezing the supply of dwellings by making it hard for developers to get finance. This combines with myriad regulations and planning bodies to further restrict the supply. At the same time, the banks are generous in their lending to consumers so are fanning demand for the restricted supply. Given the level of interest rates, this is very dangerous.

Right now, all around Australia, home builders are struggling. My advice to them is to hang in there, because better times are just around the corner.

But many will be caught with low-price fixed tenders that were made to keep their operations going. The demand surge will lift prices and make those fixed price contracts high risk.

Those buying apartments off the plan may find that the developers cannot build at the prices which have been offered.

It is rare in Australia for a looming election outcome to trigger so much activity in one industry. It will spread later into other areas.

AAP

Australian capital city home prices have risen more than five per cent in the past year, with the Sydney and Perth property markets leading the charge.

Home prices across the eight state and territory capitals rose 5.3 per cent in the 12 months to August, according to the closely-watched RP Data-Rismark Home Value Index.

Perth experienced the biggest increase during the year, with home prices up more than nine per cent, while Sydney's were up seven per cent.

Hobart fared the worst, with prices down 1.1 per cent over the year.

Sydney was the strongest performer during the past three months, with prices up 5.4 per cent in that period.

RP Data research director Tim Lawless said the rate of increase in prices slowed to 0.5 per cent nationally in August.

"The half-a-per-cent gain over the month of August is a much more sustainable rate of growth and will be a welcome turn of events for policy makers," he said.

Rismark chief executive Ben Skilbeck said investors, rather than owner-occupiers, were likely to drive most of the growth in home prices during the coming months as they took advantage of low interest rates and solid returns.

"While the owner-occupier segment of the market is more than twice the size of the investor segment, there continues to be a number of indicators suggesting that this spring investors will be punching above their weight," he said.

By a staff reporter, with AAP

Building approvals jumped over 10 per cent in July, beating analyst expectations of a more modest rise, according to the Australian Bureau of Statistics.

ABS data showed the number of buildings approved increased a seasonally adjusted 10.8 per cent to 14,304 during the month.

That compares to 12,778 approvals in June, seasonally adjusted.

Bloomberg economists had expected the figures to show a four per cent increase in approvals during the month.

Building approvals are now 28.3 per cent higher, seasonally adjusted, than in the same month last year, against analyst expectations of a 20 per cent lift.

Approvals for fully-detached houses rose 3.9 per cent in the month.  

JP Morgan economist Ben Jarman said there was a rebound in approvals for both the detached houses and higher density homes categories.

"I don't think there is anyone who is doubting that building approvals are trending up, the question is how sustainable is it?" he said.

"We're reasonably upbeat about what building approvals can do this year. In fact, we think they will be adding more to growth than they have in the last few quarters.

"The question is will they offset what we're seeing elsewhere, which is a fair bit of weakness."

In this special interview from the Australia Davos Leadership Forum, Robert Gottliebsen talks to Stuart Grimshaw, CEO of the Bank of Queensland about the prospects for a housing boom, the banks strategy in gaining market share against the majors and the impact of technology.

Macquarie Group Ltd's real estate investment trust in Mexico will buy a pair of retail properties for a pricetag of $US153, as it ramps up its expansion into and around North America, The Australian Financial Review reports. 

According to the newspaper, the two properties, Tecamac Power Center and Coacalco Power Center, are located in the Mexico City metropolitan area.

The AFR reports Macquarie has estimated the properties will generate an annual  net operating income of around $US12.73 million.

Crown Ltd chairman James Packer has bought a five per cent stake in American online real estate marketplace Zillow, The Australian Financial Review reports.

According to the newspaper, this lifts his stake in the Nasdaq-listed company to 9.3 per cent.

Mr Packer last month sold his stakes in jobs website Seek Ltd and fund manager Magellan Financial Group Ltd.

By a staff reporter

Houses are more affordable than at any time in the past decade according to research released by the Real Estate Institute of Australia (REIA).

According to the research, housing affordability has improved in the past two years with the proportion of income to meet repayments now sitting at 28.7 per cent.

The Australian Capital Territory (ACT) remains the most affordable state and at 5.6 per cent higher than the rest of the country, New South Wales (NSW) the least.

Real Estate Institute of Australia President, Peter Bushby said that with the exception of the Northern Territory, all states and territories recorded improvements over the June quarter, the largest in Queensland.

“Affordability is improved in all states and territories when compared to the same time last year and no doubt, the seven interest rate cuts since November 2011 have played a role,” said Mr Bushby.

The REIA suggested stamp duty reforms, access to superannuation and assistance to first home buyers as a way to boost the participation of first-home buyers in the market.

James Packer has used some of the proceeds from his recent Seek and Magellan stock sales to make a major, and so far very profitable, investment in an online US real estate group. It’s the latest sign of where his investment interest lies. Elsewhere, Perpetual has three business days to respond to IOOF’s bid for The Trust Corporation, Perilya gets a healthy $270 million takeover offer, Woolworths makes a smart political move and mining M&A hits a wall. 

James Packer, Zillow, Seek, Crown, REA Group

James Packer has put some of the proceeds of his recent Seek and Magellan Financial sales to work already, accumulating a significant stake in US online real estate group Zillow for around $300 million through Cavalane Holdings. The stake, according to Bloomberg data, is Packer’s most valuable investment beyond the 50 per cent position his family business (Consolidated Press) maintains in Crown.

Packer-related entity Cavalane Holdings, which held the stakes in Seek and Magellan, has purchased a little over three million Zillow shares to claim 9.35 per cent, according to a 13G filing with the US Securities and Exchange Commission this week. A 13G filing indicates the investor owns between 5 and 20 per cent, but is planning to be passive and not exert control over the business. In other words, they like the business as it is and are just trying to make money.

The move is a further signal that Packer has two main investing interests: gambling and online classifieds.

It has largely proved successful of late, with Crown's stock up 40 per cent this year and the Seek sale netting a $50 million profit. There’s every sign so far that Zillow will prove as shrewd.

The Australian reports that Packer has been acquiring the stake throughout the year on the advice of Caledonia Investments. This means he is already well ahead, particularly if he bought before the Aussie dollar’s parity resilience was shattered.

Zillow’s stock, which listed in 2011, hit an all-time high overnight and is up 270 per cent since January 1. Even if Packer had started building his shareholdings a week ago he would be well in the black, with the stock surging 20 per cent since.

There are plenty of commentators comparing Zillow to Australian online real estate market leader REA Group (owner of realestate.com.au). It is valued at a similar figure – between $3 billion and $5 billion – though there is the view that Zillow has more room for growth given the comparative market sizes. The note of caution, however, is that competition is much fiercer in America.

Packer was no doubt won over based on the comparisons to REA, and is willing to back it in to outflank the competitors, led by Trulia. Or perhaps he might also buy into the latter, as Trulia is a company also recommended to him by Caledonia, according to The Australian.

IOOF, Perpetual, Equity Trustees, The Trust Corporation

The Trust Corporation is keen to test the waters with latest suitor IOOF Holdings, giving previously favoured bidder Perpetual three days to respond to the new offer. Trust said it considered IOOF’s proposal “likely” superior to that of Perpetual. As alluded to in yesterday's Breakfast Deals, this is what the market was expecting based on share price movements. Now the question lingers as to Perpetual's likely response.

It has until Monday at 1700 AEST to match or better the IOOF offer and may decide it’s not worth the hassle given there’s still the risk the Australian Competition and Consumer Commission will put the brakes on a deal. It does have the financial capacity to respond however, and the latest market moves provide reason to suspect it will follow through.

Perpetual closed at its lows, while Trust ended near its daily highs on Wednesday. Investors appear to be betting that a new offer will provide a boost to Trust, while being a possible near-term downside risk to Perpetual (they would be paying more, after all). This sentiment appeared to change around lunchtime when Perpetual was up 1.5 per cent.

In the meantime, the company that kickstarted the bidding process, Equity Trustees, is expected to sit pretty and enjoy the benefits of having a 13 per cent stake in a company sought after by two strong suitors. It may have lost its target, but the upside ain’t bad.

Perilya Limited

As expected, a takeover offer has been lobbed in the direction of Broken Hill miner Perilya Limited by its largest shareholder, Shenzhen Zhongjin. The Chinese-based suitor already has a 53.4 per cent holding and a deal for complete control was always on the agenda.

What is perhaps a little surprising is the premium to the current share price of 59 per cent, which values the group at $269.4 million. Given the lack of another likely bidder, this appears to be a sound result for Perilya. Not surprisingly the board has given its (conditional) tick of approval and there appears very little likely to stand in the way of a quick resolution. What Billabong wouldn’t give for that...

Shares in Perilya lifted 43 per cent on the news to 32 cents, just below the takeover offer of 35 cents in another signal that investors expect no further offers. And who could blame them?

Woolworths, SPC Ardmona

While the competition regulator continues to keep an eye on the retail behemoths, leading supermarket operator Woolworths has made a shrewd political move in choosing to source private label canned fruit products from Victorian-based SPC Ardmona.

The ‘we care about local suppliers’ deal extends by $3 million an earlier $7 million move to source 13 lines of Select canned fruit from the Coca-Cola Amatil-owned SPC. The new Australian sourced products will be available in a year.

It’s the second piece of good news in a week for SPC, which was informed by the Labor government it would receive $25 million should it commit to operations beyond 2020. It is not known if this will be supported by the Coalition.

Mining M&A

Accounting and services firm PricewaterhouseCoopers yesterday released a downbeat assessment of mining M&A. Global deals were 31 per cent weaker in the first half and this is not expected to improve in the second half, nor next year. Even if you took out the major Glencore-Xstrata deal from last year, deals were down 21 per cent year-on-year.

The report says it isn’t a shortage of takeover targets that’s the issue, rather too few buyers. The big players are divesting and the mid-tier groups are just trying to get their own houses in order on the back of a downturn in prices.

As for Australia, the lucky country accounted for a mere 3 per cent of all mining deals in the first half.

Wrapping up

In resources, ASX-listed engineering company Monadelphous Group has signed a $235 million contract with resources giant Rio Tinto for works at the Cape Lambert Port B project in Western Australia. The contract is slated for completion by the end of 2014.

There’s more action on the gambling front, with another UK bookmaker claiming an online Australian betting company. Not long after William Hill bought out Tom Waterhouse, Ladbrokes has reached a $22.5 million deal to acquire Gaming Investments, which owns bookmaker.com.au. Speaking of William Hill, the wagering giant is looking to consolidate its Australian brands under the William Hill name, according to the AFR. This could include Sportingbet, Centrebet and tomwaterhouse.com.au.

In energy news, Dart Energy has successfully raised $11.9 million from institutional investors at a 10 per cent discount to its share price at the time of the raising. It hopes to raise a further $8.8 million from shareholders at the same price of 9 cents. On the surface it is a surprise the company’s share price shot up on the news – from 10 to 11.5 cents – until you realise that investors have a couple of days to buy in to get the offer. The entitlement date is Friday September 6 and existing shareholders have the right to feel aggrieved.

And finally, Coastal Capital has denied it is a scavenger feeding off the severely weakened Billabong International. A managing partner with the hedge fund told the AFR that the company thought rival bidders could emerge if Billabong opened its doors a little wider. It is however of the belief the Oaktree Capital, Centerbridge Partners proposal is superior to that of the solo deal put forward by Altamont Capital and preferred by the Billabong board.

By a staff reporter

Westfield Group and Westfield Retail Trust have been cleared to acquire a Perth shopping centre after the consumer watchdog said it would not oppose the deal.

In a statement, the Australian Competition and Consumer Commission said the verdict was conditional on Westfield's acceptance of a court enforceable undertaking to sell their ownership of a nearby shopping centre.

The watchdog said it considered whether the acquisition of Karrinyup Shopping Centre would result in Westfield extracting higher rents from retailers.

Since there is limited retail space available in north-west metropolitan Perth, the ACCC said that Westfield's ownership of two competing shopping centres may result in a substantial lessening of competition.

To remedy its concerns, the ACCC said the acquisition will be conditional on the group selling Westfield Innaloo to a purchaser approved by the watchdog.

The Australian reports the centre is valued at $620 million, of which Westfield and Westfield Retail already hold a one-third stake.

By a staff reporter

Mirvac Group has appointed John Mulcahy as its chair, replacing James MacKenzie.

In a statement to the Australian Securities Exchange, the real estate group said Mr MacKenzie had decided to stand down from the role at this year's annual general meeting.

Mr Mulcahy has been on the Mirvac board since 2009 and previously held senior roles at Lend Lease Corporation, Suncorp and Commonwealth Bank of Australia.

A number of homes in the top end of Melbourne’s property market are quietly changing hands including the $10 million sale of ex-Labor MP Evan Thornley’s East Melbourne residence, The Australian Financial Review reports.

Mr Thornley and his wife bought ‘Amberley’ on George Street in 2002 for $7 million.

According to the newspaper, more than 70 per cent of real estate agent Abercromby’s business has been happening off-market.

The AFR reports there have also been recent sales of homes in Hawthorn’s James Park ($7.5 million), Toorak (over $4 million) and Brighton ($7.5 million).

Let’s assume, despite the evidence, we do have a “budget emergency”. No one doubts the budget needs to be rebuilt over the economic cycle, but let’s assume for now we need urgent, drastic action to fix the crisis. Where to start?
 
Politicians have an array of tools at their disposal. Most of us agree that extensive borrowing right now is simply kicking the can down the road. So park that idea. Although public services are stretched, spending cuts would help the fiscal position. But even the strongest advocates of public service cuts in the Coalition are reluctant to be too specific about them for fear of political backlash.
 
That leaves tax increases, which are also a political no-go zone for both sides (excepting Tony Abbott’s parental leave levy which is offset with a company tax cut).
 
After that there’s just one tool to fix the budget, and that’s tightening up on tax concessions. For there are surprisingly few people or companies who pay their legislated marginal tax rate. In office, Labor has tightened access to some of these, notably the private health insurance rebate and the superannuation tax concession.
 
But there is one concession that remains inviolable, our most sacred of cows – negative gearing. In the face of a budget emergency, negative gearing has warranted barely a peep in the election campaign.
 
If there were truly a budget emergency, and governments were truly serious about fixing it, negative gearing would be amongst the best places to start. Bank of America economist Saul Eslake describes it as “a system that rewards people for losing money” and says that removing it would be close to the top of his policy agenda.
 
So what are the policy arguments for and against negative gearing? The argument for negative gearing can be simply summarised: we allow investors to deduct the carrying cost of investments for other asset classes, so why not for investment property? If we treat investment property differently, we distort the allocation of capital across the economy.
 
Unfortunately, the facts don’t bear this argument out. As Eslake’s quote suggests, most people use negative gearing to run property at a loss in order to reduce their recurrent tax liabilities. The primary objective is not to invest in a productive asset that will generate a positive cash flow, which is the intent of the tax credit, but to minimise an investor’s tax payable on other income sources.
 
According to Treasury, the cost of this concession is around $30 billion each year. This makes negative gearing the single biggest concession in the budget (superannuation is a close second). The size of this concession, or ‘tax expenditure’ is equivalent to the entire forecast budget deficit for 2013-14. In simple terms, if we removed negative gearing, our ‘budget emergency’ would rapidly disappear.

Another strong argument against negative gearing is that it is highly regressive – it disproportionately benefits richer households relative to poor ones. Nearly 40 per cent of households in the top income quintile access negative gearing, compared to less than 5 per cent in the bottom quintile. This means the average top-quintile household enjoys a concession of over $70 per week, while the average bottom-quintile household sees less than $10.
 
Finally, despite the incentive it offers property investors, negative gearing has been unable to remove a chronic shortage of housing supply. So it costs Treasury a proverbial bomb, encourages loss-making behaviour, is highly regressive, and has failed to dent housing shortages.
 
Given this, why are politicians so reluctant to tackle it? It’s because the use of negative gearing has become so widespread that attempts to tackle it unleash a storm of criticism in the electorate, particularly amongst wealthier voters who can exercise political voice.
 
When Paul Keating abolished negative gearing in 1985, he faced a concerted campaign of opposition that ultimately forced him to restore it two years later. As Ken Henry was preparing his tax review that chose not to oppose the concession, he told journalists he still bore the scars of that 1980s experience.
 
Is there another way? It’s certain we won’t see any action against negative gearing in a new Abbott government (or a returned Rudd one), but here’s an idea to put in the drawer.
 
Why not limit negative gearing to new-build housing only from now on? All current entitlements would be grandfathered, so no existing investors would be affected. But for any new investor to access the concession, they must be building new dwellings which address the country’s housing shortage, rather than flipping old apartments on the Gold Coast.
 
It mightn’t be the wholesale abolition of negative gearing that would be demanded by a budget emergency, but it’d be a start.

David Hetherington is the executive director of Per Capita, a progressive think tank.