Slowdown looms for listed property trusts

Deutsche Bank and Merrill Lynch have issued “sell” recommendations on the listed property trust sector with analysts saying several trusts are close to all-time highs and the sector now appears to be over-valued. The view is that LPTs can't sustain 6-7 per cent yields. Deutsche Bank said it's expecting 5 per cent distribution growth for the 2003-04 financial year, falling to 3.7 per cent next year. Merrill Lynch expects a total return of 6.2 per cent over the next 12 months. The ASX 200 Property Trust Index has risen 6.5 per cent over the past month compared with a 1.2 per cent rise in the wider sharemarket. Following the downgrades the LPT index fell 38.2 points last week.