Aug. 6 (Bloomberg) -- GPT Group, the second worst- performing Australian property trust this year, is ditching the overseas investments that contributed to about $3.46 billion in writedowns announced this year.

The Sydney-based company, which last month exited its European joint-venture with Babcock & Brown International, will sell the offshore investments that made up 20 percent of its assets as at December, it said in a statement to the stock exchange today. After the divestments, it aims to have 100 percent of its real estate investments in Australia.

GPT shares added 6.9 percent to 54 cents at the close of Sydney trading, paring this year’s decline to 32 percent.

“I think it’s a strategy that investors are looking for from GPT,” said Macquarie Group Ltd. analyst Callum Bramah, who has an “outperform” rating on the stock. “The key for growth for GPT, once they remove those non-core assets, will be all about driving efficiency and maximizing earnings out of portfolios, combined with opportunistic acquisitions.”

GPT, along with rivals such as Centro Properties Group, invested in U.S. and European properties which were amongst the worst hit when global property values tumbled and borrowing costs spiked due to the credit crunch. GPT last month wrote down A$1.16 billion ($976 million) on its investment in the joint venture with Babcock & Brown, adding to A$2.15 billion in total writedowns it announced in February.

‘Disappointing’

“The last couple of years have been disappointing for investors across the real estate sector,” Chief Executive Officer Michael Cameron, who took up the role in May, said in the statement. “GPT is now returning to what it does best.”

GPT has already sold A$700 million of assets since December, the company said.

Properties it’s still seeking to sell include a portfolio of office and industrial buildings in the Netherlands, the Homemaker City shopping centers in Australia, and the U.S. part of its joint venture with Babcock & Brown, the company said.

The sale of those assets is likely to take at least 12 months, Macquarie’s Bramah said.

“Until that is completed, results and valuations will be muddied, so you’re still a little way away from having that clarity and that simple business model,” he said.

GPT last week cut the valuation of the Australian real estate holdings it wants to keep by 6.2 percent, or A$560 million, and holdings it wants to sell by 15.2 percent, or A$230 million, at June 30, compared to their value six months earlier.

The company sold A$1.7 billion of new shares in June, giving it enough money to meet all its commitments through to December 31 2010, including about A$2.4 billion of debt maturities, GPT said in a statement at the time.

To contact the reporter on this story: Sarah McDonald in Sydney at smcdonald23@bloomberg.net

Last Updated: August 6, 2009 03:24 EDT