Commercial Property Trusts

[Yack]

Peter Spann talks about commercial property trusts and how they earn good income (usually geared 20-30%) and good deprn benefits. He says he can use the income from these to pay towards his negative geared properties.

I am looking into this further. Does anyone have any comments on this?

 

[GreatPig]

Yack,

Don't know much about commerical property trusts, but whether or not that's a good strategy would depend on your circumstances.

For example, my employment puts me in the top tax bracket already, so I'd prefer maximum capital growth and minimum income to allow any negative gearing to reduce the tax on my employment income.

In other words, I already have enough income to offset any negative gearing (although of course that would depend on the actual amount of gearing losses).

Cheers,
GP

 

[Yack]

<<<For example, my employment puts me in the top tax bracket already, so I'd prefer maximum capital growth and minimum income to allow any negative gearing to reduce the tax on my employment income.>>>

I am in the same boat as you. But my understanding goes something like this.

You do get good growth and access to commercial properties. You negative gear the purchase of these shares or units. The income from these trusts pays the interest and you get deprn benefits which reduce your other taxable income and they you get some extra income.

I am currently reading Peters latest book, but i am not upto it yet.

 

[GreatPig]

I am currently reading Peters latest book

I've bought it, but haven't had a chance to start it yet. I've still got a few books waiting to be read.

Cheers,
GP

 

[Dona Ferentes]

Sorry it's taken nearly 20 years to reply,

In 2023, more than 14 per cent of Sydney CBD offices are vacant, according to the latest research from real estate firm JLL. In Melbourne, it is 16.2 per cent.

And liable to get worse. An investor in this sector may have been lured by good yield, regularly paid, but at what cost? Illiquidity is seeing redemptions slowed, limited, delayed or even halted indefinitely. Valuations are infrequent, and based on magic pudding formulations.

Unforeseen then, a perfect storm has been brewing. Low interest rates (free cash!!), tech connectivity (finally!) then Covid / working from home, has meant a transformation of work habits. People don't want to work in offices, often with long commutes, and corporations are finally getting that.

When leases expire, it's likely to get worse.


A bit on valuations can be found here.

Real estate gap causes concerns - ShareCafe

20 Jul 2023 - Australia's largest landlords have recently downgraded the values of their office block portfolios, but investors are seeking deeper discounts amid a significant gap between public and private valuations.

www.sharecafe.com.au