Babcock %26 Brown shares dropped 2 percent Thursday, closing 49 cents, or 38.7 U.S. cents, lower as 23.51 dollars, trimming its gains for the year to 37 percent, more than double the return of the 56-member S%26P/ASX 200 Finance index. GPT stock fell 2.8 percent to 4.91 dollars.
Britain is following Brazil, France, Hong Kong, Mexico, Russia, the United States and 13 other nations that have allow real estate investment trusts.
Several British real estate companies including Land Securities Group and British Land, the two largest in Europe, plan to convert to these trusts next year. By doing so, they gain tax breaks in return for distributing at least 90 percent of their taxable income in dividends.
Shares in the Babcock %26 Brown and GPT property fund were due to begin trading on the Amsterdam stock exchange on Dec. 6. The companies have acquired 5.7 billion dollars in property assets in Europe and the United States as of Nov. 21.
Nic Lyons, chief executive of GPT, teamed with Babcock %26 Brown to expand in Europe and to raise earnings growth amid a dearth of opportunities in Australia, were most available investment-grade property is already owned by trusts.
GPT Group, the fourth-largest Australian real estate investment trust, and Babcock %26 Brown injected a further 800 million dollars into their property venture last month to buy more assets and start new investment funds.
British real-estate returns are starting to decline on a quarterly basis, according to Investment Property Databank. Property investments delivered a return of 3.8 percent in the third quarter, the lowest since the first quarter of 2005 and less than the 4.9 percent return for the second quarter this year.
Stock Investment January 29th, 2008
