Local Shopping Reit (LSR) has launched a no-options-barred review of its business, with a sale of its portfolio or the whole operation on the cards. The company's share price has declined continually this year and now trades at just over half underlying net asset value, even as its large-cap peers have bounced strongly. And LSR's bosses have concluded that the market is telling them to do something.
They cite the "size and capital structure, and the challenge of creating a scalable business during a period of considerable property and financial market volatility" as reasons for the poor stock-market rating. In other words, LSR is too small and has too much debt. As capital values weaken, the loan-to-value ratio of 72 per cent worries investors, even though the debt is not due until 2016.