Left Field

Headline: Tough cycle 'can be navigated'

Australian Financial Review, pg 66. Lisa Carapiet. 27 February 2009.

FKP Property Group, 15 percent owned by Stockland, had almost $200 million of write-downs and impairments in the first half. FKP managing director Peter Brown said banks were difficult to deal with in the present economic environment. Impairments included $56 million from development inventory and the Retirement Village Group investment and FKP Property Trust were written down by a combined $39 million. The property group completed the Transport Accident Commission building in Victoria during the half while trading slowed at its Peregian Springs residential development on the Sunshine Coast. Mr Brown said FKP and Stockland had a good working relationship. Cromwell Group this week said it had bought into FKP's Energex building in Brisbane.

Headline: Financing costs set to fall

Australian Financial Review, pg 65. Nick Lenaghan. 27 February 2009.

Centro Properties Group yesterday used its balance sheet to reveal the benefits of its complex debt restructure plan. Chief financial officer Tony Clarke revealed that in the six months to December 31, Centro paid nearly $105 million in financing costs, mostly on interest costs and its financial derivatives.

Headline: Shake-up and job cuts flagged

Australian Financial Review, pg 65. Ben Wilmot. 27 February 2009.

Property and construction group Lend Lease yesterday announced a management restructure and said it would cut 1700 jobs worldwide as new chief executive Steve McCann. The group's departing head, Greg Clarke, joined his successor Steve McCann in warning that conditions would be difficult for the next 12 to 18 months as tight credit conditions hit property markets. Mr Clarke noted the group's Bovis construction division had delivered a strong result, but the contribution from the Actus business had fallen. Lend Lease also sold a portfolio of retirement villages into Lend Lease Primelife, formerly Babcock & Brown Communities. UBS analyst John Freedman said the Lend Lease interim result was slightly above expectations.

Headline: Mall income to rise in Australia

Australian Financial Review, pg 64. Robert Harley. 27 February 2009.

Westfield Group yesterday revealed its forecasts for the coming year and its full year guidance and the results were generally well received. 'They are the best REIT in the sector - a standout global powerhouse, ' said John Snowden of Colonial First State Asset Management. Westfield joint managing director Steven Lowy said the Australian business was 'in really good shape', but this did not stop valuers from writing down the value of assets, such as the landmark Bondi Junction centre. Justin Blaess of ING Investment Management said Westfield had a strong balance sheet and strong management. He felt more acquisitions were on the horizon.' Co-managing director Peter Lowy said the company was anticipating a two to three percent fall in the UK and US. In comparison, major UK competitor Liberty International is crippled. The Lowy's acknowledged their Australian result was helped by the Rudd governments first stimulus package.

Headline: Move for two-year delay on emissions

Australian Financial Review, pg 6. Sophie Morris and Louise Dodson. 27 February 2009.

Australian Industry Group chief executive Heather Ridout yesterday spoke in support of the federal government's emissions trading scheme but recommended a delay in its start date to 2012. Ms Ridout said the opposition should support emissions trading and pass the legislation by years end. Other industry groups have spoken out against the emissions trading scheme, such as Minerals Council of Australia chief executive Mitch Hooke. 'The whole scheme needs to be reviewed and redesigned before legislation is introduced,' Mr Hooke said. The Coal Association is also lobbying the government for change, while farmers are opposed to the scheme and the Greens believe targets are too modest. Nationals senator Baranaby Joyce has led the voice of opposition for the coalition saying the scheme needs to be shelved until the global financial crisis has passed. Coalition emissions trading spokesman Andrew Robb has claimed the scheme will cost jobs.

Headline: Drought assistance reform

Australian Financial Review, pg 3. Sophie Morris. 27 February 2009.

The federal government hopes to push through changes to drought assistance funding in time for implementation with the May budget. Agriculture Minister Tony Burke said the old system would continue to apply for regions receiving drought support until the drought had broken. The Productivity Commission will submit its final report on drought support today and it will argue there is no justification for subsidies to rural businesses and interest rate subsidies should be axed. The commission supports Farm Management Deposits, as does Mr Burke.

Headline: Call to scrap super breaks for wealthy

Australian Financial Review, pg 1. Steven Scott and Fleur Anderson. 27 February 2009.

The Rudd government is being urged to give low and middle income earners tax breaks as part of major changes to retirement income. The Australian Industry Group, whose chief executive, Heather Ridout, is a key adviser on Treasury secretary Ken Henry’s review on tax, wants lower earners to get a rebate on the 15 percent tax on their superannuation payments. Superannuation funds and the Australian Council of Trade Unions (ACTU) have backed the calls.

The move could be funded by tightening super tax breaks available to richer earners.

The plan could also include measures allowing employees to use some of their superannuation to buy government annuities which would be paid as pensions. The Ai Group and the ACTU both had input on a report on retirement incomes from the Industry Super Network (ISN) and the Australian Institute of Superannuation Trustees (AIST) which will be given to the government today. The government will also get a report from into pensions chaired by Families Department head Jeff Harmer.

Headline: Telstra chief goes early as profits slide

Australian Financial Review, pg 1. Dominic White and Tracy Lee. 27 February 2009.

The 57-year-old yesterday announced his four-year reign was to end prematurely as Telstra also warned that one-off costs and the economic downturn would affect its full-year profits. Its half-year results showed net profit slid 1 percent to $1.9 billion. Its interim dividend was kept at 14 cents.

During Mr Trujillo’s tenure Telstra was excluded from the Federal Government’s national broadband network plans, sending shares tumbling and opening the door for rivals including SingTel Optus. Mr Trujillo argued the government terms were not viable for Telstra. He is to return to the United States with a $3 million severance payment and up to $9 million in salary and bonuses. Telstra has not yet found a replacement although a number of executives including BT Group’s Gavin Patterson are known to have been approached.

Hugh Giddy, managing director of Cannae Capital Partners said people held mixed opinions of Mr Trujillo. Tyndall Investment Management analyst Michael Maugham suggest Telstra’s long-term forecasts are now vulnerable because of the economic slowdown. Mr Trujillo used the announcement of his departure to defend his reign, saying he had kept Telstra ahead of the game’ despite a weak Australian economy.

Headline: Downturn forces Swam to rethink budget strategy

Australian Financial Review, pg 1. Laura Tingle. 27 February 2009.

Extra government spending on paternal leave and higher education could be scrapped in favour of further economic stimulus measures, it has been claimed.

Treasurer Wayne Swan is changing his strategy for the May budget and is know to favour introducing new ways of stimulating the national economy. He confirmed yesterday his priorities had changed in the wake of new job losses. Lend Lease confirmed it was sacking 340 staff, clothing maker Pacific Brands last week said 1,850 jobs were to go while Telstra also predicted future job losses. The federal opposition has sought to capitalise on comments yesterday by Industry Minister Kim Carr, who said no jobs are safe, putting the government under more pressure.

Headline: ‘Minor’ recession verging on major

Australian Financial Review, pg 58.Matthew Cranston. 25 February 2008.

At a recent forum of the Royal Institution of Chartered Surveyors, Lend Lease’s Rod Leaver predicted a 20 percent slump in commercial property values as the recession bites. He also said industrial property would be hard hit. Peter Barge of Jones Lang LaSalle said his wealthiest clients in China and India had lost about 60 percent of their wealth over the last year, most of it tied to property. AMP Capital’s John Dynon likened the UK property market to a fish market at the end of the day when vendors are desperate to unload at any price.