December 14, 2007, was the day of infamy in the Australian listed property trust (LPT), or to use the correct international expression, real estate investment trust (REIT) sector, when Centro Property (CNP) hit the wall. Not one analyst saw it coming, although strategists had earlier mostly suggested REITs were a bit of a risk in the credit crunch. Merrill Lynch did downgrade to Sell just before the proverbial hit the fan, but only because Centro called a trading halt. There was no chance to sell anyway.
Valad's update on the trust's debt position surprised the analysts in a negative sense as gearing turned out to be 40% instead of the anticipated 35%. They note Valad's risk profile has thus increased.