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Last month we released part 1 of our series Property trusts: What could go wrong’ and progressively published parts 2-5 over May on our Blog. In this special edition of Review, we deliver all five parts of the series to you.

This series of articles highlights some of our risk analysis so that you’re informed of the threats and have a strategy to deal with them, regardless of whether they happen or not. From retail spending declines and the threat of Amazon; to the potential for stretched commercial valuations, the impact of rising interest rates and how flexible work impacts the office sector – we examine each of these big issues.

As an AREIT fund manager, it’s our job to assess where risk might occur, it’s potential impact and, where necessary, manage the risk through our portfolios. As the old saying goes, if you want to capture the upside, first look at the downside. That’s what this series is all about.

Take a look around you. If you’re at work, perhaps you can see the physical evidence of what many property trust investors are fretting about – empty desks.

Employees prefer the flexibility of working from home, or the local café, and if they do come into the office, they don’t much care about not having their own desk. Employers, meanwhile, are keen to lower rental costs. Is this marriage of convenience a genuine threat to AREIT investors?

Click here to read part 5 of the series.  
 
For a few years now, Australian interest rates have been at or near historic lows. In fact, the Reserve Bank cash rate of 1.50% is unchanged since July 2016 with key indicators pointing to minimal change.

Still, as we’ve seen in the US recently, the interest rate cycle has changed with rates now increasing. For investors in  AREITs there are three factors that should arrest any concerns when this occurs. 

Click here to read the full article.
 
The arrival of Amazon, the argument goes, will destroy Australian retail just as the internet destroyed newspapers. Amazon is a giant bundler offering low prices, incredible range and astonishing distribution. That spells trouble for retailers and, by extension, shopping centres.

The question for investors in shopping centres is whether malls can adapt to what is likely to be reduced demand for floor space from troubled retailers. History suggests they can, through their own form of unbundling, and a number of other factors. 

Click here to take a look at these factors.
 
In the U.S - department stores JC Penney, Macy’s and Sears have announced massive store closures while the share prices of high profile retailers like Lululemon and American Eagle have been pounded.

Against a backdrop of low unemployment, increasing wages and GDP growth, the sector is struggling. The obvious conclusion – that the era of the mall is coming to an end – has not escaped Australian journalists.

But, does the fear have more to do with emotion and the need for a good headline than the facts? 

Click here to read the full article.  
 
Whether you see them or not, risks are ever present. Successful investing is about recognising and understanding the potential threats and managing them, even if they don’t subsequently arise. 

As the old saying goes, if you want to capture the upside, first look at the downside. That’s what this series is all about. 

Click here to read part 1 of the series.