The Distillery: Westfield checkout

One jotter ponder Westfield's motives in the US, while another says SMSF adventurers consistently outperform.

It’s a bit of a mixed bag for this morning’s Distillery, or should we say a cocktail rather than a straight scotch? Westfield’s latest asset sales lead us off, with the Lowy family executing a very deliberate plan to reshape the stock. Also, Australia’s self-managed superannuants are showing themselves to be more than capable of matching it with, and often outperforming, the big super funds.

Fairfax’s Adele Ferguson writes that Westfield’s latest sale of US shopping centre assets is part of a “grand plan” from the Lowy family to bump up return on equity and turn the company into a growth stock.

“It was a plan it began in earnest in December 2010 when it split the Westfield juggernaut into two listed entities: Westfield Retail Trust, a vanilla property trust that brings steady returns; and Westfield Group, a more active and diverse global business with a strong pipeline of shopping centre developments. Sales of the US property assets on Monday were completed at a 7 per cent discount to their book value at December 31. But, to put it into context, the productivity (sales per square foot) on the seven properties is 22 per cent below its US portfolio average.”

In other news, while it’s clear many self-managed superannuants get into the industry without knowing the risk they’re taking on, The Australian Financial Review’s Chanticleer columnist Tony Boyd says there’s plenty of evidence to suggest the majority of them get into it with the right attitude and aptitude.

“The latest SMSF asset allocation numbers published by the Australian Tax Office show that trustees are choosing to put their money in places not offered by many professional service providers. At a time when the bank-owned fund management companies, AMP and industry super funds have stuck with a vanilla selection of products, SMSF trustees have shown a penchant for being more adventurous. Some will say that investing in overseas residential property, collectables and using non-recourse lending is fraught with danger and going to lead to disaster. But the analysis of SMSFs by Rice Warner actuaries published on Monday by ASIC commissioner Peter Kell shows they have consistently outpeformed the professionally managed funds over the longer term.”

Also, The Australian’s John Durie reports from Indonesia on the country’s touchy financial markets amid speculation about the Federal Reserve’s next chairman, which of course could greatly influence the central bank’s money printing program.

“That is one reason Jakarta has openly supported the Bank of Indonesia's rapid increase in interest rates in the last few weeks, from 6.5 per cent to 7.25 per cent. On some calls, Indonesia is relatively well placed and that's certainly the message Finance Minister Chatib Basri was trying to drive home in interviews over the weekend, saying the nation's relatively low fiscal deficit of 2.4 per cent of GDP was manageable, but a record $US9.8 billion ($10.5bn) current account deficit needs work, as does inflation. Stability was his catchcry. Bank economists are winding back GDP forecasts, from as high as 6.5 per cent earlier in the year, to 6 per cent at best. Deteriorating economic fundamentals are one thing, but with the election season already started, political risks have raised more concerns among foreign investors at exactly the wrong time.”

Still in economics, the Herald Sun’s Terry McCrann points out that the immediate economic future of average Australians is being shaped just as significantly by the decisions of bureaucrats in Washington as by our own boffins in Canberra — think succession planning at the Federal Reserve.

Although speaking of Canberra, The Australian Financial Review’s Jennifer Hewett believes incoming assistant treasurer Arthur Sinodinos will have his work cut out for him in an ill-defined portfolio that will include superannuation and financial services.

In company news, Fairfax’s Elizabeth Knight writes about the changing role of John Alexander as a confidant of billionaire James Packer, as the Crown executive deputy chairman’s position is confirmed for an ‘indefinite’ period.

And finally, The Australian’s Barry Fitzgerald says he’s always astounded at how Australian junior miners and explorers are tearing it up in all corners of the globe.

His case in point this morning is the ASX-listed Base Resources, with its $US305 million ($326 million) Kwale mineral sands project in Kenya. It’s due to come online this year.

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