MAB Bucks the Offshore Investment Trend (04/03/2008)

While many Australian investors have shied away from offshore property markets in the aftermath of the subprime
collapse, some regions of the US have bucked the trend of economic slow down and exposure to one
such area has provided consistent solid returns for Australians invested with MAB's International Retail
Trust.
Investing in an asset category often regarded as recession resilient, together with a targeted location
strategy, has proven the secret to the success of MAB's US based fund.
The city of Charlotte, North Carolina - where three of MAB's retail centers are located - has remained
largely insulated from the fallout of the sub-prime, buoyed by low unemployment figures, steady house price
increases and higher than average wages.
Median household wages in the catchment areas of the MAB properties are up to twice the US national
average. The Charlotte Observer reported last year that local house prices rose 4.3 per cent, based on the
national index, while other metro areas struggled. According to a January Standard and Poor's/Case Shiller
Home Price Indices report, Charlotte, Portland and Seattle are the only three Metropolitan Statistical Areas
still experiencing positive annual growth rates.
In November 2006 leading ratings house and financial researcher Lonsec rated the International Retail Trust
as ‘recommended' (lower end) and despite the current economic turmoil across the US the fund has retained
its ‘recommended' rating in a subsequent review conducted in January this year.
The retail portfolio has been strategically positioned in regions and cities' exhibiting population growth and
where disposable incomes are high and spending is solid. The fund portfolio contains five retail properties
all located in growth areas in North and South Carolina.
MAB Funds Management general manager Nick Gray said that despite the economic slow down across the
United States this region of the country, which is within the "Sunshine Belt", has defied some national trends.
"The trust's major focus is on basic food retail spending, as opposed to high end discretionary spending, like
fashion and electrical goods," Mr Gray said.
"Our strategy was simple - everybody has to eat, so developing a trust that invests in the supermarket and
convenience retail sector provides a secure and growing income stream even during difficult economic
periods," he said.
Last week USA Today reported that for the month of January retail sales rose as consumers spent more on
necessities while cutting back on non-essentials. Grocery purchases were up while spending on restaurants
and bars was down for the first time in five months.
So while house prices are generally weak in the US, Charlotte remains positive on a 12 month view and has
the best market in the survey at +2.9 per cent. Charlotte is the second largest financial centre in the US,
housing the headquarters of both Bank of America and Wachovia. According to CB Richard Ellis, Charlotte
also has the strongest office market in the US with a vacancy factor of only 2.3 per cent at December 2007,
the lowest in the US for the fourth straight quarter.
"MAB's strategy of centering the fund's assets in the ‘growth engine of the south' has proved that investors
should always look for sound, well based investment strategies when looking to diversify their funds, and
consider that generally property investment is a proven long term performer," said Mr Gray.
"In volatile times investors should concentrate on investments having predictable income supported by long
term leases as these will provide the best protection."

 

Top 5 Fund Features:

 
1. The strategy of investing in grocery based shopping centres in population growth areas of the US.
2. Strong predictable cash flows - 8.45 per cent, 90 per cent tax advantaged - Average unexpired lease
term of 7.4 years from 1 January 2008. 11.7 years for the major tenants who account for 48 per cent
of the income.
3. Risks mitigated by hedging currency and fixing debt on a long term basis - weighted average term of
the debt facilities is 5.3 years from 1 January 08 with fixed interest rates.
4. 98.8 per cent occupancy.
5. Experienced Australian and USA based management.


*Lonsec provides financial advisers with in-depth, quality managed funds research, spanning a range of
traditional and alternative asset classes.
*Standard & Poor's, a division of The McGraw-Hill Companies (NYSE: MHP), is the world's foremost
provider of financial market intelligence, including independent credit ratings, indices, risk evaluation,
investment research and data.
Available for interview:
Nick Gray, general manager, MAB Funds Management
David Rosenthal, president of MAB Rosenthal, MAB's US Joint Venture Partner (please note time difference
of -19hrs hours)
For further information contact Siobhan Koopmans, Haystac ph: 03 8689 2244 / 0430 062 288
About MAB Corporation
With $2 billion in projects completed or commenced, MAB Corporation generates approximately $300 million in annual
sales and employs over 100 people.
Highly successful MAB projects include the $1 billion landmark NewQuay development at Docklands, the revolutionary $1
billion Univeristy Hill mixed use precinct in Bundoora, National Business Park, The Anchorage Apartments, Northcorp
Industry Park, Translink Business Park and a host of award-winning developments.
MAB Corporation in a joint venture with Gibson Property Corporation (GPC) have now embarked on their largest and
most visionary development to date being the $5 billion, 880 hectare Merrifield project in Mickleham, Victoria. MAB
Corporation also has a growing funds management arm with approximately $300 million under management.

 

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