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Listed and Unlisted Property Trusts

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Redwing

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15 August 2004
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Hi all,

Hey what happened to my Hills selection for the Sept Comp?

On another matter, i've been reading of Peter SPANNs recommendation for Commercial Property Trusts (listed and unlisted) and his views on them being a psitive cash flow alternative.

Anyway peterhas said on occasion hat returns on quality CPT's range from 6-12% at the moment?

and capital Growth has avraged approx 11% over the years, andthe trusts come with considerable tax advantages also..

Is anyone out thier a fan of Trust's?

Any feedback welcomed, pro or con's?

REDWING
 
now that a "solution" to the mortgage trusts is being cobbled together

wonder what they will do about the unlisted property trusts

fairly large sector, but have'nt hear much about it

can only imagine a lot of retirees especially would be looking to redeem

problem is the same as mortgage trusts, not enough liquidity to allow, could get very ugly for commercial and office property if they start selling assets.

I sold them all over the last 12 months, to my great benefit
 
awg said:
problem is the same as mortgage trusts, not enough liquidity to allow, could get very ugly for commercial and office property if they start selling assets.
Click to expand...
I can't see too many of their listed cousins buying up. Their too busy trying to raise equity to keep their heads above debt.
 
Property is an illiquid investment in the best of times. In the midst of the 'greatest credit crisis since the Great Depression' nearly all commercial transactions have dried.

Now seeing this is happening:
1. unlisted trusts typically pay out 100% of rental monies received as distributions;
2. credit markets have seized up - hence debt cannot be refinanced, or if it is refinanced, the cost of funding has increased significantly especially to highly geared entities (which UPT typically are);
3. investor are panicking and their is a 'flight to safety' (ie government guaranteed deposits); and
4. retail investors are licking their wounds.

...well there is no way that UPT can continue meeting redemtpion requests without seriously breaching bank covenants. They just cannot raise cash via their usual channels - credit markets, asset sales or equity inflow.

So you freeze redemptionsm, cut distributions, try and sell assets and ride it out.

Remember redemption freezes are there to protect capital is the worst-case scenario (a la the 1980's) is the following:
1. credit markets freeze up;
2. equity markets get hammered;
3. there is a flight to cash;
4. every Tom, Dick and Harry liquidates their 'investments', leading to an erosion of the trusts capital base;
5. covenants are breached;
6. banks call in the administrators, triggering an asset fire sale; and
7. everyone, apart from the selfish one or two who got out first, takes a serious hair cut.

The moral of the story - if you are in it for the short term, stay out of the goddamn property market! Over the long-term it will outperform cash.
 
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