2010 Media Releases

Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) has initiated coverage of Abacus Property Group (ASX: ABP) with a Buy rating.

Research Analyst Jason Weate said “We view the property trust as cheap on our base-case assumptions. On balance, we view the risks to these assumptions as being to the upside, and believe that as Abacus demonstrates an ability to redeploy capital back towards its core activities, the stock should be positively re-rated ”

According to Deutsche Bank, Abacus‘s exposure to mortgages, funding to external vehicles, and to a lesser extent JV’s, has led to market uncertainty about the robustness of current book values. ABP is therefore faced with the challenge of extracting non-core capital for reinvestment in to core activities whilst preserving shareholders’ equity.

Weate said “We believe that is appropriate to adopt a conservative stance on both near-term earnings potential and values associated with these activities. However, ABP appears undervalued on both an earnings multiple and sum of the parts methodology”.

Downside risks for the company include: impairments on balance sheet exposures to interim loans, finance book and/or JV projects; higher than expected all-in cost of borrowings upon refinancing in second half of 2011; the inability to extract capital out of the funds management business over time; and greater than expected downtime on lease expires.

Abacus Property Group is a stapled property trust which specialises in property investment, funds management, property finance and joint ventures. Abacus’ stapled vehicle combines two companies, Abacus Group Holdings Limited and Abacus Group Projects Limited, which is stapled with two trusts, Abacus Trust and Abacus Income Trust. ABP has four integrated businesses including a diversified ‘core-plus’ direct property portfolio, a property funds management business, a JV’s/projects business and a property financing arm.

For further information, please contact:

Amy King +61 (0) 2 8258 2505