Funds that purchased industrial property at the peak of the market are ‘going to get smashed’, says real estate investor Warren Ebert.
Fund managers that purchased industrial property at the peak of the market, and with tenants locked in for years on fixed rental increases, are going to get “smashed” by rising inflation and falling values, predicts veteran real estate investor Warren Ebert.
“A lot of leases over the last few years have been structured with fixed annual increases of 2.5 per cent, when inflation is running at 7 per cent. The longer the lease, the further behind they will get,” Mr Ebert said.Advertisement David Libling, CEO at industrial property specialist Pipeclay Lawson, said industrial property yields had risen 25 to 50 basis points since it sold a portfolio of four warehouses in Sydney and Brisbane to global investment firm Hines for $211.5 million in April“That may sound small, but consider the impact of a change in yield from 3.5 to 3.75 per cent,” he said. “It represents a fall in value of $2 million on a property with a net rent of $1 million per annum and valued at $28.
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