Property trusts

Hi,

Following on from my initial post, I have decided to come back and write a more comprehensive answer.

Property Trusts

The first point to note here is the accounting structure mentioned, i.e. a trust.

A trust is a legal structure that exists where ownership is separate from entitlement. For example, in a trust the assets are administered by the trustee for the benefit (i.e. earning of income) that flows through to those entitled to receive those profits (i.e. the beneficiaries).

The type of trust mentioned here is a unit trust, which means that beneficaries’ entitlements is based on the number of units held (i.e. the more units, the more profits flow through to them).

The value of these units is reflected in two ways:

1. The underlying value of the asset base – meaning that as assets appreciate in value then so too does the value of the units; and

2. Speculation – usually in respect to future values or earnings.

Transacting of Units

Property trusts can be public or private in nature. Units in Public Property Trusts are traded on the Australian Stock Exchange, and as such you’ll need a broker (or an e-trade account) to instigate a buy or sell order.

On the other hand, purchase and sale of units in Private Property Trusts are transacted out of the public’s eye.

You could say there are two types of private trusts:

* Private public property trusts – whose units are available for the general public to purchase, and where the amount of funds or number of investors are large enough to warrant that a prospectus (meeting ASIC guidelines) be issued, however these units are not traded on the stock exchange; and

* Truly private property trusts that don’t meet the ASIC requirements requiring a prospectus, and instead are privately administered.

Authority

The authority (i.e. the document outlining the rules) for any property trust are contained in the trust deed. This would include the purchase and sale of the units, trustee powers etc.

Where the trust is listed on the ASX then it must also meet further requirements under the ASX listing rules.

Purpose

The general purpose of having a property trust is for various investors to pool their resources (and thus spread the risk) to acquire property, usually of a significant dollar value (such as a shopping centre, inner city building etc.).

Well, that’s about it for now… hope this has provided a little more information.

Cheers,

Steve McKnight

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Remember that success comes from doing things differently.
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Hey mate,

You’re more than welcome! Please report back with your decision / research / more questions.

Regards,

Steve McKnight

**********
Remember that success comes from doing things differently.
**********

Dont forget the interest on the loan is deductible [biggrin]

You would be better off speaking to a broker

Why not contact http://www.freemanfox.com and speak to one of thier brokers, as Peter’s an advocate of LPT’s

REDWING

“Money is a currency, like electricity and it requires momentum to make it Effective”
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Hi Waz11,

you can do a margin lend, when purchasing shares, though it will depend on the margin LVR, that is willing to be lent out.

i dont really like property trust, as they are slow moving stocks, and to be honest, you can earn more from solid blue chips stocks and have margin lend on them.

though those returns are true… that is on a very few selected small amount of stocks, that can consistenly grow at 15% for a few years, before the stock hits an acceptable peak… and just sits at that price.

my real main concern is, if you investing into property and into the share market (but also buying property trust – LPT), your not diversifying your self..

and to me personally this is a little bit of extra risk you are carrying on…

Cheers,
sis

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Hi Redwing,

lol… thats correct [strum] i’m very passionate about my intrady trading activity…

Cheers,
sis

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