SQM Research Ratings Update
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SQM Research Ratings Update - Monday 24th March 2014
Property Valuations
Research Reports
Discounted/Distressed Properties
Funds Research
The Count's 
Comments for the Week

“Economists are just like the GPs of the medical world – generalists in everything yet specialists in nothing! Ah..ah..ah!"
Ratings Table
To see the entire table of SQM Research's fund ratings, click HERE

(Please note: In order to view individual ratings reports you must be subscribed to SQM Research Ratings research. To subscribe, click HERE)


SQM Research has revealed thousands of residential properties selling under distressed conditions on the market, via the research firm’s recently released “Distressed Properties Report”. The report has revealed -
  • 11,437 properties in total selling under distressed conditions representing 3.3% of total current listings (stock on market).
  • 304 properties currently advertised as mortgagee in possession.
  • 1,200 additional properties selling under “forced” selling conditions.
  • The region with the largest amount of distressed conditions is the “Gold Coast Main” with 14.6% of its market in ‘distress’.
  • Victoria has least amount of distressed listings as a percentage of the total market at just 1.4%.
SQM Research announced last Tuesday this new residential property report that publishes properties selling under distressed selling conditions on a weekly basis.

Managing Director of SQM Research, Louis Christopher says, “What we have been able to do here is a national first and opens the way for property buyers to efficiently search for these types of properties. In addition, we are also able to provide these homes’ advertising history, date and price of that they last sold for. While the major listors enable some manual searches of these properties, it is impossible to search for them in bulk and multiple distressed key terms with their marketing and sold history. For our subscribers we are now filling this void.”

SQM Research also believes the data will be a useful measurement of market conditions. The firm intends to update the public each month on changes in the amount of properties offered under distressed conditions. Overall, the expectation is that there will be rises in distressed properties during market downturns or a rising interest rate environment; and falls during market upturns and an improving economy.

The tables below reveal the market share of distressed listings in each state and as well as some of the highest regions:

State Distressed listings % of market
Queensland 5,812 6.5%
New South Wales 2,046 2.7%
Victoria 1,310 1.4%
South Australia 662 2.9%
Western Australia 1,245 2.9%
Tasmania 258 2.0%
Australian Capital Territory 49 1.6%
Northern Territory 55 3.0%
National 11,437 3.3%
Top six regions with highest percentage of distressed listings all come from South East Queensland
Region Distressed listings % of market
Gold Coast Main 557 14.6%
Gold Coast North 186 9.7%
Gold Coast Hinterland 198 8.2%
Gold Coast South 97 7.9%
Gold Coast West 118 6.5%
Sunshine Coast 714 6.4%
A distressed listing is defined by SQM Research as a property being offered for sale where it is advertised that the property is sold under any of the following conditions:
  • Mortgagee in Possession, bank forced sale or liquidation event
  • Selling below valuation, cost or last sold price
  • Heavily reduced or “bargain” conditions
  • Divorced sale, deceased estate, illness conditions
  • Requirement for an immediate sale conditions
The distressed properties report also includes overseas seller listings, price reduction listings and other listings that may indicate a potential distressed sale such as “submit all offers”, however these classifications have not made the count in this release.

A subscription to the distressed properties list costs $39.95 and is available immediately online HERE.


SQM Research analayst - Aakriti Chona provides us with some insight into our most recent Domestic Property Securities Review -

Continuing on from our discussion last fortnight, this week we look at funds that were covered in our 2013 Domestic Property Securities sector review. Funds within this sector invest mainly in Australian Real Estate Investment Trusts (A-REITs) though some funds might have marginal exposures to international REITs or even unlisted property trusts.

Domestic Property Securities Review Fund Returns – January 2014

Source: SQM Research, Bloomberg and data sourced directly from the funds. ^ Annualised.
* The Fund comprises of both A-REITs and Infrastructure securities. ** The Fund’s rating has been put On Hold till a full review is conducted by SQM Research. 

A total of 12 were rated by SQM Research during the 2013 review. Some of the strongest performance within the rated funds came from SQM Research’s highly regarded 4+ star funds. All of the funds reviewed have proven long-term track records and performance history. Moreover, they have clearly recovered from the lows of the Global Financial Crisis and are now providing investors with stable returns and income.

Comparison of the ASX 300 Accumulation Index vs. the ASX 300 A-REIT Accumulation Index – January 2014 

Source: Bloomberg, SQM Research

The ASX 300 A-REIT index forms one of the most popular choices for benchmark index by the funds in the sector.
As can be seen in the chart, the A-REIT sector has underperformed the general Australian equities, as measured by the ASX 300 index over the year to January 2014. However, most SQM Research rated funds reviewed have continued to outperform their stated benchmark, providing their investors with stronger returns compared to broader A-REIT index. 

Domestic Property Securities Fund Excess Returns vs. Unrated Funds – January 2014

Source: SQM Research, Bloomberg and data sourced directly from the funds.
Excess returns are based on each fund's respective benchmarks and are based on net returns after fees.
The Legg Mason Real Income Fund has been excluded from this analysis given that it is benchmark unaware.
The EQT SGH Wholesale Property Income Fund employs CPI+3% (over 5-year periods) as its benchmark. However, the ASX 300 A-REIT Accumulation Index
has been used for the purpose of this chart. 

It is evident from the chart above that our highly rated funds in the A-REIT space continue to dominate in terms of generating excess returns to their respective benchmarks over the short and longer periods. The excess returns of our highly rated 4+ star funds have been staggering compared to the rest of the market over one-, three- and five-year periods.

The trend clearly shows that funds that have chosen not to get rated by SQM Research have continued to lag the ones that do!


SQM Research Signs IPP Financial Advisers 

SQM Research announces large Singapore based financial planning group has joined its financial planning subscriber base.

SQM Research is pleased to announce that Singapore based IPP Financial Advisers have subscribed to SQM Research's Ratings Services including its fund manager research.

Founded in 1983, IPP is one of the largest independently owned financial planning group in Singapore with over 300 advisers. IPP has been a pioneer in the licensed financial advisory services.

It is becoming increasingly clear that that more adviser groups, both domestically and internationally are realising that SQM Research does provide superior real estate, infrastructure and structured products  fund research compared to its peers. This is enabling SQM’s financial adviser clients to post outperforming returns for its investors.

This signing is the most recent in a list of recent respected financial advisory groups singing up including:
- Lifespan Financial Planning
- IMR Financial Planners
- Suncorp Financial group

This is of course, not an exhaustive list.

SQM is also known very widely for its independent residential property research and data, which many advisers are finding useful as part of their- Self Managed Super Fund service of their clients.

Since its inception, those funds that have rated four stars or more with SQM have clearly shown out performance relative to lower and unrated peers.

Managing Director of SQM Research, Louis Christopher says â€We are clearly delivering insight to our financial adviser clients that, quite frankly, our peers have not been able to match.

“The reality is our competitors simply do not have the specialist experience to handle real estate related funds and that’s why those have followed our ratings process are delivering good results to their own clients.

"That’s is why we now have very respected dealer groups, both domestically and internationally tapping into our research. And I can assure you now we will be having more supporters joining us in the following months.”

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