26/11/2008 - 22:00

Westscheme asset review

26/11/2008 - 22:00

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MAJOR local superannuation fund -Westscheme has brought forward valuations of unlisted assets as the global financial crisis buffets investments across the spectrum.

Westscheme asset review

MAJOR local superannuation fund -Westscheme has brought forward valuations of unlisted assets as the global financial crisis buffets investments across the spectrum.

Industry super funds had been viewed as something of a safe haven for investors because they tend to have a higher level of alternative asset classes, such as infrastructure, which have previously proved less volatile than listed assets.

However, the current turmoil is not allowing any immunity from financial pain.

Westscheme chief executive Howard Rosario said the $3.22 billion fund independently valued its unlisted assets annually but also reviewed those valuations at least quarterly. Where appropriate, the board can seek an earlier revaluation than scheduled.

"In the current environment we are bringing forward a number of valuations," Mr Rosario said.

He said it was important Westscheme kept valuations up to date to ensure there was equity between 200 people making redemptions each month from the fund did not do so at the expense of those 200,000 remaining.

"Obviously you don't want people who are leaving now to get paid out at a price that other members will not realise," Mr Rosario said.

Despite the concern to keep redemptions equitable, he said anecdotal evidence suggested that those who could were delaying their retirement due to the crisis.

In the past financial year, Westscheme's net market value of investments movement was negative $407.4 million, compared with a $268.7 million gain in the previous year ending June 30.

A significant amount of those losses were in unlisted asset.

For instance, Westscheme has already written off its $26 million investment in Sydney's Lane Cove tunnel project and written down its Bankstown and Camden Airport investments by around $11 million.

In its financial instruments it has written off about $39 million of collateralised debt obligations and written down its corporate loan obligations by about $14 million.

In addition, Westscheme wrote down by almost $34 million the value of its Brisbane Square office tower, which it valued at $440 million on the books at June 30. The write-downs were due in part to increased land tax as well as the fall in property values.

Westscheme increased the Brisbane Square investment value from $364 million at the end of 2006-07 but has since found that latest valuation, produced at the end of 2007, as overly buoyant.

Mr Rosario said the fund manager had put the building up for sale as a result of the new valuation but had since withdrawn it following the market's deterioration.

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