Closed-end property trusts

[marynicolehicks]

I am look for a property trust to buy into. I would like it to be closed-end style. My reason for this is that I have watched people rushing to sell open-ended funds like the AMP Capital NZ Property Fund. Such a rush forced AMP to sell underlying assets. I was thinking that if a property trust is closed-ended at least they are not forced to sell the underlying assets at the worst time when people sell (Number of shares stays the same).

I am currently looking at AMP Office, ING Property, Kiwi Income Property Trust and Property for Industry. How would I go about working out which of these are closed-ended and which sell the underlying assets when they are sold?

Or do I have this wrong and are all trusts typically closed-ended and all funds open-ended?

[777]

Take a look through this thread. It may help with your decision.

http://www.sharetrader.co.nz/showthread.php?t=7133

[fungus pudding]

I am look for a property trust to buy into. I would like it to be closed-end style. My reason for this is that I have watched people rushing to sell open-ended funds like the AMP Capital NZ Property Fund. Such a rush forced AMP to sell underlying assets. I was thinking that if a property trust is closed-ended at least they are not forced to sell the underlying assets at the worst time when people sell (Number of shares stays the same).

I am currently looking at AMP Office, ING Property, Kiwi Income Property Trust and Property for Industry. How would I go about working out which of these are closed-ended and which sell the underlying assets when they are sold?

Or do I have this wrong and are all trusts typically closed-ended and all funds open-ended?

I'm not quite sure what you're getting at here, but I think all the listed property companies are trusts. But their share structure is exactly like any listed company. Any investor who wants to redeem his/her shares must sell on the market. the rtrust will not redeem them. In recent times several have sold properties because of bank lending ratios getting out of kilter with reducing values, and banks being a little less liberal than they werebefore the recent credit problems..

[OldRider]

I think you have your answer, and it as you thought.

The managers of UNIT trusts are required to arrange the repurchase of their units,at a specified valuation price,consequently they will prudently hold a reasonable proportion of your investment in cash, and in difficult times this may not be sufficient, forcing the sale of properties at a bad time, driving the unit valuation down, or else suspension of redemptions.

Prices for Listed trusts may drop on the market below asset valuation, but at least a sale should normally be possible, they have the advantage of not needing to keep as much cash on hand which should enhance return. They have a fixed amount of capital
(closed end) so are unable to sell further units (open end) as can a unit trust.

There have been some property shares at significantly lower than asset values on the ASX recently so perhaps a look there might be rewarding. It's has been the same for LIC's as well