# Property shares in lieu of owning property?



## arae (18 July 2009)

*Whoops  - this was meant to be placed in the ASX Stock Chat forum. Could the moderators please move this post.*

I've long wanted to purchase property or land,mainly for investment purposes. However, with work keeping me on the move for long periods, I see it as being somewhat of a burden/hassle to maintain. As such, I'd like to instead invest a portion of the capital intended for actual property into a range of property shares.

Is anyone else in this situation or actively invests in property shares?  

I'm thinking shares which have long term potential (10-30 years). As a means of compiling a list, would people like to share some stocks that fit this criteria and you consider worth closer research. 

To get the ball rolling, so far I've only come across;

MOF - Partly owned by Macquarie with investment in office property mostly in the US and Australia. Currently 22.5c - Yearly low:0.07c, high; $1.14


Cheers


----------



## MrBurns (18 July 2009)

*Re: Property Shares in lieu of Owning Property*

If you can do it without heavy borrowing buy property direct, your own home or for investment then just put it in the drawer forget about it and it will look after you in the long term.


----------



## drsmith (18 July 2009)

The LPT (A-REIT) sector is a geared exposure to commercial property. With the major listed A-REIT's, gearing has been reduced somewhat mainly as a consequence of capital raisings to pay down debt.


----------



## skc (18 July 2009)

Property shares are not really substitutes for owning property.

The biggest difference is that owning property allows you leverage without mark to market margin calls.

Owning direct property you can leverage some 90%, but the bank doesn't call in the loan if the property value falls by 10, 20 or 30%.

Try that with property shares and you will be margin called in no time.


----------



## So_Cynical (19 July 2009)

Agree with skc "Property shares are not really substitutes for owning property" how ever i do think there is substantial upside to the property sector at the moment...the sector as a whole is depressed and in general has not rallied as much as other sectors.

Have a look at SLF, its an exchange traded fund that tracks the property components of the ASX200


----------



## skc (19 July 2009)

So_Cynical said:


> Agree with skc "Property shares are not really substitutes for owning property" how ever i do think there is substantial upside to the property sector at the moment...the sector as a whole is depressed and in general has not rallied as much as other sectors.
> 
> Have a look at SLF, its an exchange traded fund that tracks the property components of the ASX200




Agree, So_C...I currently hold SLF as well on the same line of thinking. I was actually more interested in a basket of small REITs (i.e. anything that's not WDC, SGP, MGR and LLC). It seems to me for every 1 that will fail, 1 will linger and 1 will survive and thrive. TSO and MCW were examples last week.

If anyone know of a REIT investment fund of that nature please let me know.


----------



## awg (19 July 2009)

skc said:


> Agree, So_C...I currently hold SLF as well on the same line of thinking. I was actually more interested in a basket of small REITs (i.e. anything that's not WDC, SGP, MGR and LLC). It seems to me for every 1 that will fail, 1 will linger and 1 will survive and thrive. TSO and MCW were examples last week.
> 
> If anyone know of a REIT investment fund of that nature please let me know.




I believe that WDC comprises 60%+ of the sector, although I may be mistaken, so SLF may not be the the right thing, if you dont like WDC.

one or two of the REITs have very large Oz residential landbanks, cant remember which ones sorry

DYOR, as always.

I hold MCW, DXS, and direct property


----------



## kincella (19 July 2009)

*Re: Property Shares in lieu of Owning Property*

oh my goodness......Burnsie..are you not well ?  I thought you were against buying property....especially now....are you not waiting for it to crash ?



MrBurns said:


> If you can do it without heavy borrowing buy property direct, your own home or for investment then just put it in the drawer forget about it and it will look after you in the long term.


----------



## kincella (19 July 2009)

I was a bit shocked by Burnsie's post...but recovering now.....

my 2 cents worth.....you should look at some of the companies that are builders and developers....for eg; DVN Devine....Leighton has a big stake and may take it over one day....Devine have some good land banks around Melb..
GPT are the shopping center owners.....not sure where they are at the moment with capital raising...SDG...again you need to do some research...they were doing work in Dubai before the crash....
myself I like APZ they were buying up all the caravan parks...big land content there,
and AXI...it has the Laurence family running it now...and Maccas has been in there and another WA poperty family behind them....it has been buying specific buildings eg The AGE in Melb and others....
put up about $5000 into each....=$25,000

the resi builders should recover before the commercial sector...in the short term
I hold several resi properties and a couple of commercial  props


----------



## Krusty the Klown (19 July 2009)

There is a big difference in owning direct property and being exposed to property through listed companies.

Mainly in terms of risk. Owning an investment property is much less risky than REITs - mainly management risk, over-leveraging, bankruptcy risk. You have no control over the decision making in the property trusts. Management could run the business in to the ground, which has been highlighted in the last couple of years.

This is the same risk with any listed company you invest in but we are talking return from real esate exposure 

Also the capital value of retail or commercial property is much more volatile than residential property.

Having said that, you would expect better returns from REITs than direct property due to the increased risk.

So I suppose it would come down to how comfortable you feel with taking more risk.



skc said:


> If anyone know of a REIT investment fund of that nature please let me know.




I know of two - AMP Capital Investors and Colonial First State. The AMP one has exposure to global real estate. I'm not sure of their exact names, but they should be on their websites.

There are others out there too.


----------



## kincella (19 July 2009)

I did not include any REIT's in my suggestions.....a very good reason for that....so far the management have proved too big on taking risks with the REIT's...leveraged them to the hilt, took big fees, left shareholders with shells

all the companies I noted have either good management always  AXI and APZ and DVN....I thought SDG were good, but the exposure to the high end market in Dubai brought them down
GPT had excellent management over the years....but in recent years that took a dive and they acted like a REIT...they should have stuck to holding shopping centers in OZ...a simple formula that worked well for years...

AVJ is another resi builder and developer....they are not high risk....like a property owner, they look to the long term......and the long term looks good for Australia


----------



## MrBurns (19 July 2009)

*Re: Property Shares in lieu of Owning Property*



kincella said:


> oh my goodness......Burnsie..are you not well ?  I thought you were against buying property....especially now....are you not waiting for it to crash ?




That was a general statement, I would wait till the market corrects of course but over the long term all will be ok, the very long term I mean.

I will buy but not yet.


----------



## kincella (19 July 2009)

yes, seems to have gone too hot too quick...silly as there is no rush imo....
I am looking to buy another for my brother....and to be able to fix low rates is a huge incentive to buy sooner rather than later....
I need some more spare time to cover that project....maybe I can take a break in August and concentrate on it
cheers


----------



## So_Cynical (19 July 2009)

kincella said:


> all the companies I noted have either good management always  AXI and APZ and DVN




AXI are trading at 5 cents a share....im guessing there's some issues there?
not to mention a market cap of 21 million.


----------

