Property Trusts
 There are two major types of property trusts available for you to invest, namely listed property trusts (LPT) and unlisted property trusts (UPT).
LPT functions under a different pricing regime to the UPT market. As the name implies LPTs are listed and traded on the stock exchange, so the unit value is likely to change daily. It can go up, and it can go down. Essentially, the LPT manager purchases and manages property on behalf of unit holders and regularly values the property assets. This value is known as the net asset value (NAV). However, this NAV may not be the selling price, as the buy/sell price is determined by the buyers and sellers in the stock market.
The features of the UPT are very similar to LPT, with some differences in relation to unit price valuation method and liquidity. In UPT, the price of units is determined through a method referred to as ‘appraisal based pricing’, which is dependent on the valuer’s judgement to determine the value of the properties within the portfolio at regular periods. Units are purchased from the fund manager via a financial adviser or directly from the manager through a prospectus, and not via the stock market. So, the movement in the unit price is less volatile.
Property trusts allow you to pool your money in funds invested in the property market, with the potential for both income and growth. Property trusts are not capital guaranteed, so their value can change with market variations, and can increase or decrease in value.
The security of a property trust investment depends on the type of trust, the properties it holds and its investment policy. Some property trusts borrow funds to invest, and as a result a higher borrowing (or gearing) level can increase the possible amount of capital gain or capital loss. It is generally considered by investment advisers that an investment in property and property trusts is less volatile than shares.
For more information on Property Trusts, or any of our financial services, you can ring us on (02) 9680-0131. Alternatively, you can book a FREE Consultation, by using our Online Enquiry Form.
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