Investment Process
LMW Invest is a specialist property fund manager, offering a diverse array of both listed and unlisted property investments sourced in Australia and overseas.
Successful investment management requires a focused, robust process and an experienced, professional team. Our investment philosophy governs the way we manage the Fund and aligns our objectives as fund managers with those of our investors.
At LMW Invest, we believe that the differing structures of property provide opportunities to take advantage of market inefficiencies. Markets must be looked at and analysed for what they really are. To us, the listed market in Australia does not lend itself to active management at this time, but may at some stage in the future. The international REIT market on the other hand, provides a far larger pool of investment opportunities - particularly when you partner with experts in their fields and location.
Our view is that direct property is an inefficient asset class that needs to be actively managed to maximise performance. Many managers promote themselves as being active but few establish fund structures encourage true active management.
About Australian Listed Property
A dynamic and challenging sector
The Australian listed property market is one of the most developed in the world. It is now the fourth largest by capitalisation, following the US, Japan and the UK.
This market has undergone significant changes over the past 10 years. Many listed property trusts now have management or development companies “stapled” to them, and gearing (or borrowing) is commonplace. It continues to evolve - international exposure is increasing as globalisation has become a major influence. Around 40% of Australian listed trusts’ assets are outside Australia.
The Australian listed property market has a combined asset value of over $100 billion and generates more than $600 million of rent every month from thousands of tenants, many of which are blue-chip investors and household names such as Woolworths, Coles, BHP, Westpac and the Australian Commonwealth Government.
Listed property investments as a sector have delivered relatively steady income returns over the long term, even through tumultuous times where capital values of those securities fluctuated significantly.
Many of these factors mean that risk in the sector has also increased. This has been particularly evident during the early half of 2008.
It requires an astute manager to navigate this market successfully.
About International Listed Property
A growing market
A key benefit of investing in offshore property securities is the significant increase in diversification for investors across different countries and markets, trust managers and properties.
The international listed property securities market is moving at a fast pace. The estimated global market capitalisation stands at more than USD$800 billion and is expected to exceed USD$1 trillion by 2010.
LMW Invest considers that:
- the emergence and development of more sophisticated legislative frameworks in certain countries is adding to the attractiveness of their property trust sectors;
- significant inefficiencies remain in international listed property markets and so good investment opportunities exist; and
- the underlying fund managers that have been selected are able to take advantage of developments and pricing imbalances.
Unlisted Property Investments
LMW Invest’s investment style encompasses management of property portfolios using a bottom-up approach that recognises the importance of economic conditions and investor needs. Bottom-up analysis is conducted by seeking properties that provide returns targeted to exceed benchmarks.
In addition, we employ top-down analysis that looks at economic and market fundamentals, business cycles, and market momentum.
We follow a disciplined portfolio construction process based on the following principles:
- Focus on medium to longer-term horizons;
- Portfolio diversification and construction, both geographical and sectoral;
- Portfolio exit strategies for each investment; and
- Maintaining a disciplined and structured approach to portfolio construction and management.
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