Peter Spann's new book title

Book referrence...

Amazingly I can't find the reference on a quick glace in my own book!
Damn that lack of index! (I'll have a better look later - but how about some of you who have read it?)
However in the book, "How You Could Build a $10 Million Property Portfolio in just 10 Years" you may like to refer to Pg 138 for a discussion on CF+ properties.
And I have placed an edited version (minus the conversational aspects) of the chapter on CPT's in the reprint of "Wealth Magic" - "From Broke to Multi-Millionaire in Just 7 Years" in this thread.

Hi Robyne,

page 14

the story at the bottom. COMMERCIAL PROPERTY TRUSTS.

Cheers

Cheers Y-Man!

Heard a caller named Peter on Triple-M this morning talking about his red ferrari.

No one we know, I suppose?

GP

Peter,

You've provided a lot of information about property trusts, which is very much appreciated.

But how is Fox Invest performing? Is there a place where we can keep track of performance? Is there a reason you put clients into Property Trusts and not Fox Invest?

Thanks

CPT's v's Fox Invest - answer to Geoff's question

Commercial Property Trusts are just one aspect of investing. They are not the be all and end all. We use them as a cash flow positive property investment alternative and/or where people want a high yielding investment. As part of a balanced portfolio they may very well have a place.



So we would not automatically prefer an investment like a CPT over anything else (including Fox Invest) – it would depend on our needs analysis for that client.



We are very happy with the progress of Fox Invest. We are about 80% invested and the growth portfolio in particular is doing very well. Premium for “The Magic Moo CowTM” is a bit thin at the moment so the performance of the income part of the protfolio is a bit under expectation, but has made up for by the growth shares at this stage. Of course more information can be made available to shareholders rather than in a public forum like this.



We report quarterly to our investors and the end of our first quarter was 30th September 2004 (ie: yesterday) as the company commenced operations on 1 July 2004. The prospectus also closed on 30th September. So all investors should expect a letter from us in about 3 weeks. We will be setting up a “shareholders only” web site which will have the quarterly results but that probably will occur in the first quarter of next year as we are short an IT person at the moment.



As the prospectus is now closed we are not taking in any new investors for the time being and as it is untested we could not recommend it to a client over a proven format like a well known and managed CPT – our financial planners were instructed to only allocate part of clients “speculative” allocation. Also it does not currently have liquidity and so our recommendations were restricted to a small amount of our clients’ available capital.



Hope this explains.

Nah

GreatPig said:

Heard a caller named Peter on Triple-M this morning talking about his red ferrari. No one we know, I suppose?

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Nah, not me. I listen to old folks easy listening 97.3 FM! Anyway only a w$#%ker would tell people in public they owned a Ferrari - oops, that's right I put mine on the front of my book!

Good questions - some already answered

Porscha said:

What drives the price of a Listed Property Trust?

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1. The NTA (Net Tangible Asset) value of the trust/fund - in other words - what are the buildings, cash reserves and other assets of the trust/fund worth?



2. Yield - in other words "how much does it pay out to investors?" Of course this can be affected by vacancy, interest rates (in the case of a leveraged fund) and the economy - and how that yield compares to the cash rate.



3. Market Sentiment - if CPT's and that one in particular are in or out of favour with the market.

Porscha said:

What are the main benefits of investing in a Listed Property Trust?

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Liquidity - you can buy and sell at any time through a stock broker (maybe not at a price you may like but still you can buy and sell).



Transparency - information on performance and management is readily available due to the continuous disclosure requirement for listed companies.

Porscha said:

What type of assets do Listed Property Trusts own?

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Shopping centers, industrial sheds and estates, warehouses, office blocks, high yield specialist property.

Porscha said:

Who manages the Listed Property Trusts and what are the fees and charges payable?

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They are managed by (surprisingly) specialist commercial property managers. The specialists generally set up the trusts in the first place to get the capital raising fees and then the management fees as they go along and so may be very profitable in and of themselves (eg before the amalgamation you could invest in the Westfield Trust - the actual CPT OR Westfield the company - the management company).



The fees are usually private contracts between the manager and the trust but usually equate to between 3% and 6% of the funds under management - some much higher, some lower. There can also be performance bonuses and so on. None of this is disclosed after the trust has raised its original capital so there is no transparency but CPT's are judged on their net yield and professional annalists know about how much the property assets should earn and deduct the yield to get some idea of the fees.

While I am sure this will create a howl of indignation to a certain degree you don’t have to worry about the fees because you can judge the trust on it’s net yield as compared to others anyway.

Porscha said:

What returns can I expect over time?
When and how will I receive distributions?
Are there any tax advantages?

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The returns of course vary considerably between trusts (and managers).

But generally a good performing listed trust should yield between 5% and 8% plus get capital growth in the order of 5% to 12% PA on average over 10 years.



Unlisted trusts should be getting between 8% and 12% with capital growth of between 4% and 10% on average over 10 years.



And wholesale trusts (only available to professional investors) should be getting upwards of 15% yield and 5% to 12% annual capital growth on average over 10 years.



Most unlisted trusts and commercial property funds pay either monthly or quarterly with some listed funds and trusts paying biannually or annually. We usually select those paying monthly or quarterly for our clients who specifically want cash flow income. They are paid as cash to nominated bank accounts. Some do have reinvestment schemes but these are becoming less common because most people take the cash and run.



Most funds offer the yield paid to you with some or many tax advantages - and this is why many people who use them for income find them very attractive. Tax is paid by the trust and depending on how it is set up, the borrowings of the trusts and the depreciation on the buildings in the trust the tax advantaged nature of the income can range from 100% (in other words there is no more tax to pay) or down to 30%. While it is rare some trusts (due to how their assets have performed or gearing errors) do not offer tax advantages but I would not recommend any of these to my clients.



So, investments into well selected funds could return 5% to 12% in cash and would have no more tax to pay - in other words the yield would be fully tax paid.



Of course the yield goes up and down with the value of the fund and commercial property is notoriously volatile so you need to be aware of this when considering the investment.

Porscha said:

How can I select the Listed Property Trust that will perform and suit my needs?

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Ahh, the million dollar question... There are ratings houses (Assert, Morning Star, Investor Web, Van Eyk and so on) that analyse and compare them. That should help you with your comparison.



Of course your friendly financial planner would love to help. Gee can I think of anybody who does that - Oh yes, me!



And yes we do get commissions - up to about 6% - 2% or 3% is usual on funds going in and then 1% or 2% of funds under management per year is common for unlisted trusts and funds. Of course with listed trusts there is only the brokerage.



But here's the thing... In the case of an unlisted trust or fund the commission is usually paid by the Manager and so in that case if it is not paid to the Financial Planner (or any body else) the Manager gets it - not you - so it has no net impact on the amount invested. So as long as the planner or adviser discloses the commission to you and offers you a diverse range of the funds to choose from then I can't see why them getting the commission would be an issue. Are some influenced by the commission? Probably, but our view is...



Strategy First

Product Second

Commission last



So in other words we develop the strategy for the client first, then we seek products that will fulfill that strategy and then we worry about what we earn last. Sometimes that means lower commissions but it mostly means happy clients and happy clients means more clients, and that's what is important to us.


I hope that gives you a good idea of where to start.

Disclaimer: Peter Spann is an Authorised Representative of Freeman Fox Securities Limited, the Holder of an Australian Financial Services License. The material in this article is of the nature of general information only and neither purports nor intends to be advice. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. Investments can rise and fall in value. The decision to invest and the method selected is a personal decision and involves an inherent level of risk. None of the information in this article constitutes, and must not be construed as, an offer of securities or other financial instruments. Nor is it an invitation to you to take up securities or other financial products. Nor is it a recommendation to deal in any securities or other financial products. Before making an investment decision on the basis of any information presented in this article the investor or prospective investor needs to consider, with or without the assistance of a Licensed Financial Adviser, whether the strategies are appropriate in the light of their particular investment needs, objectives and financial circumstances. Peter Spann, Freeman Fox Securities Limited and their associates may hold shares in the companies presented and will be entitled to commissions on certain products. While every effort is made to ensure accuracy the laws and strategies relating to investing, financial services and taxation are constantly changing as does the factors that effect the likelihood of investing success for example, but not limited to, the economy, government policy, market sentiment, and time, therefore the writer does not warrant or guarantee the accuracy, voracity or timeliness of any of the information presented. Any examples presented are for illustration purposes only and previous results are no indication of future profits.

Derrrrrrrrrrrrrrrrrrrr

voodoo said:

page 14 the story at the bottom. COMMERCIAL PROPERTY TRUSTS.

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So that would be the bit at the front of the book with the big heading Commercial Property Trusts?

NO WONDER it was so hard for me to find - Derrrrrrrrrrr (which is what I believe to be a much underutlisied word in today's polite society).

Well that small section on page 14,
Commercial property trusts,
has definately created a lot of interest in this thread.

I have got my $19 dollars worth out of the book, thanks Peter.

Cheers,

Of course your friendly financial planner would love to help. Gee can I think of anybody who does that - Oh yes, me!

haha. Do you offer free consultation for the first visit in person?

Thanks for taking the time replying. I have now a better understanding on cpt's which I gather now my next step would be to form a selection criteria in picking the right cpt's for my yield portfolio. Any advice there?

Cheers Peter!

Hi Peter,

I know this is an off the track question but what is your personal opinion on property investors who wish to further branch out into the field of property development as novices, within the residential category?

Cheers,

qazwsx said:

I was curious to see the opinion of people here whether it really is possible, even probable that the average joe can go from broke to having a networth of 10 million in 10 years as per the title of Peter Spann's new book.

I don't think I should have posted the middle option. It seems like the safe option that everyone will choose. The question really is, can it be done by anyone? and if not can it be done by more than a very few minority?.

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Hum 16 pages seem to have gone in many different directions your original question. Still I will attempt an answer.

Before answering though I must consider your choice of words.
You say first, "is it possible for the average Joe...?" and later you say "can it be done by anyone...?"

The answer can only be given if you define the term "average Joe" or the term "anyone".

If anyone means an adult from the human race without any bias, prejudice and limiting believes, totally teachable, focused, and willing, the answer is a resounding yes.

Yet considering that the cross section of society may be ready, even able but is all but willing, believes to know better than the author of any book despite what their own result scream in their faces, is loaded with a barrage of limiting believes and anti values he/she holds dear and grooms every day, and possesses the focus of a gold fish, I'm afraid the answer must be no.

So how do I vote?

Hu? Sorry Marc you lost me.

Hi Peter

I was coming to a point where i was going to stop buying property investment books as they generally say the same thing with a slight variance in some cases.

But.....

Given that i haven't read any of your material before i decided to purchase your new book $10m and was duly impressed.

In particular the way to interrpret the median sales information and using it to base some decision on when to invest.

Do you feel that with all the wealth you have now you may lose touch with what people are trying to achieve?

The reason i ask this is i noticed you mention on page 172 of a person say 40 and buying three houses now etc. to achieve over time 10.2m in property and 4.8m in borrowings. These are big figures to the average person.
Then in other areas you say Don't overstretch/don't be greedy etc.
Most baby boomer people i speak to want and are looking for-
Enough to be able to retire at there present income levels
They like residential property for its low risk factor
They dont all want to get down and dirty but buy and hold for future growth
Timing is also an issue given we have just come off a boom
Many don't have the experience to start in a big way but want to start
They want something simple that works but realise that time is getting shorter and shorter as they wait...Risk vs time

Most are still paying there own PPOR and are questioning whether they still should.

There main concerns are
vacancy factors
interest rates
Shortfalls (price /rent)
If things go wrong

These appear to be limiting factors and bring some fear to move forward given that NG is a factor with quality property..

For a person like yourself that started from nothing what would your strategy be knowing what you know and the risks involved and for a say Mid 40's individual that wants to retire at 60-65 has some equity in the home. Currently earns $50000pa.

Well Peter i did really think we needed another property investment book like we need another cosmetic company but i would have to say that yours is right up there with the best if not better. I could give you the reasons but this post is a bit long already.

regards
BC

Books

I also wanted to mention two great books on Commercial Property...

Tim Hewat, Super Safe Investing with Syndicates and Listed Property Trusts, Wrightbooks, Brighton, Vic

Martin Roth and Chris Lang, How Investing in Commercial Property Really Works, John Wiley and Sons, Camberwell, Vic

Thanks for that Peter.

I haven't seen the first, but have read the second. In terms of direct investment in commercial property, I did find it a little light on.

May I ask, morfe generally, what books you have read recently which you have learnt from, or which have been inspired you? I'm asking very generrally- not sepcifically anything at all about investment?

You did mention earlier in the thread about having time to read and go to courses. Dare I ask what courses, apart from your own, if any, have you found useful, or which you have learnt from?

Thanks in advance

Robyne said:

Hu? Sorry Marc you lost me.

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Where did I lose you Robyne? Do you think "anyone" can do the proposed 10Millions ?

And just to clarify, can you tell me who is "anyone" ?

Confusion

I think the confusion may have come about becuase this is actually a very old topic that has been kept at the top of the list by the continued discussion in the thread. People noticing it for the first time have come in to answer the original question but the topic has changed considerably since then.

Peter
I read your book and now I'm rereading it with a highlighter pen in hand. Good work. I liked the story, it was rather engaging. Very much like the one minute millionare book, I agree (I read that when it first came out).

I might even buy it for xmas pressies for friends and family if you help me with some networking in Drwn

I look forward to your shares book.

Ecogirl