why NOT listed Property Trusts

[loofa]

While I have most of our listed property trusts as directly held I also have been using CFDs to add to the mix.
Below is the position starting in October 2008 (rounded to hundred dollars)
Underlying value of shares purchased using CFDs.............................................. ........... $30,000
CFD margin............................................ .........................$3000 (later $4500)
Maximum drawdown.......................................... ..............$4200
Current value............................................. .................................................. ............ $38,500
Financing cost.............................................. .................................................. ...........($2,900)
Dividends received.......................................... .................................................. ..........$4,700

Current net gain.............................................. .................................................. .........$10,300
Return on investment ($7200 maximum).......................................... ................................143%
OK drawdown could have been greater but period includes the market collapse of 2008/9 which was unusually demanding on many share values.

[beacon]

You must have either iron guts or deep pockets or great discipline to have held your CFDs right through GFC. But then LPTs were near the bottom in October 2008, so not a fair risk return example. Try having held them from jan 08 to date, you might see a different picture. Worse, if you held TEL/FBU/AIA/NZR/NPX/PGW etc from their peaks...

[CJ]

Dividends received.......................................... ....................$4,700

I thought CFD's were inefficient for income shares because of the way dividends are treated. You only get the net dividend (not the IC's) but end up paying tax on it - essentially double taxation.

ie.
Directly held:
Dividend of $67 with 33IC's. Taxable income of $100 but IC's of 33 so no tax to pay for a 33% taxpayer
CFD's
Dividend of $67 but no IC's. Taxable income of $67 so additional tax to pay of 22 for a 33% taxpayer.

Of the top of my head, excluding capital gains, that means you lose 2% compared with holding directly??

Therefore a margin account (borrowing but own the underlying share) rather than a derivative is better. Or has it changed since I looked at it.

[beacon]

Or has it changed since I looked at it.

Nothing's changed since you last looked. Also interest cost is on roughly 115% of your holding (100% interest paid + interest lost on 15% margin) = much greater than normal margin account. And no, their bulky disclosure statement does not tell you this simple fact.

[loofa]

You must have either iron guts or deep pockets or great discipline to have held your CFDs right through GFC. But then LPTs were near the bottom in October 2008, so not a fair risk return example. Try having held them from jan 08 to date, you might see a different picture. Worse, if you held TEL/FBU/AIA/NZR/NPX/PGW etc from their peaks...

No one would hold "long" in a falling market. If available eg GMT it would have been a useful short but bearing in mind the cost of paying dividends back.
In fact the maximum drawdown was because I did not pick the bottom. Not shown above is the fact that the CFDs taken up were an average between Oct 08 and June 09 and the dividends accordingly.
Tax wise I accept gross on everything including claiming the carrying cost interest.

No iron guts here just logic!

[loofa]

I thought CFD's were inefficient for income shares because of the way dividends are treated. You only get the net dividend (not the IC's) but end up paying tax on it - essentially double taxation.

ie.
Directly held:
Dividend of $67 with 33IC's. Taxable income of $100 but IC's of 33 so no tax to pay for a 33% taxpayer
CFD's
Dividend of $67 but no IC's. Taxable income of $67 so additional tax to pay of 22 for a 33% taxpayer.

Of the top of my head, excluding capital gains, that means you lose 2% compared with holding directly??

Therefore a margin account (borrowing but own the underlying share) rather than a derivative is better. Or has it changed since I looked at it.

Not if the CFD interest is 5.5% and the dividend income is 10%+
You also need a lot more capital to hold directly.

[loofa]

CFD basics
1. Require enough capital to meet the margin and the extra safety level demanded by the provider
2. Shorting allowed where provided
3. Very low commission on transactions but watch the spread
4. Quick execution to trade
5. International scope so do not require currency conversion and remittance
6. Coverage shares, sectors, indices, forex, commodities

I am not involved in any way with the CFD providers and I am not against direct investment (in fact I have a portfolio of international shares and hedge funds)
However I do have a very acute mathematical ability

[Brian]

Yes they are mostly good news have been in this market since APT took over the old capital property trust. And yes there could be an adjustment dowmwards in october because of govt moves . Another golden opportunity. good luck and get in.

[buxlo12]

There are quite a few listed property trusts available for example KPF, ING, GMT, KIP, APT
I was wanting to know if any body some more details on the property trusts so we can make some comparisons

Debt ratios?
Dividend yields?
Overall size?
How often they make distributions?
Where is the majority of their properties?
Type of properties they have?

[loofa]

There are quite a few listed property trusts available for example KPF, ING, GMT, KIP, APT
I was wanting to know if any body some more details on the property trusts so we can make some comparisons

Debt ratios?
Dividend yields?
Overall size?
How often they make distributions?
Where is the majority of their properties?
Type of properties they have?

To much to answer here so get their latest reports.
Briefly GMT is very strong in the industrial and design and build to order.
ING has a legacy of lower value building which are more easily sold on.
APT appears out of favourwith too many office buildings which are under pressure.
KIP has Sylvia Park flagship