Issue 27: Understanding investment product structures (Part 3): Property

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Issue 27: Understanding investment product structures (Part 3): Property

In our September article on Understanding investment product structures, we started talking about investment product structures at a high level and last month we talked about which type of structure may suit you if you were to invest in an asset class, such as Australian equities, in our article creatively titled ‘Understanding investment product structures – Part 2’. In this article, continuing with the creative titling, ‘Understanding investment product structures – Part 3’, we take a look at property.

These days there is a host of ways to invest into property or real estate. Most notably, many naturally fall to real property – buying and investing in a physical residential apartment, house or commercial property.

Many will also be familiar with listed property, some remembering the term LPTs – listed property trusts, now known as A-REITs (Australian Real Estate Investment Trusts), which can be bought and sold on the ASX like a share.

Maybe not so well known will be ways to also use the ASX to invest into the funding of commercial property development via a closed-end listed investment trust (LIT) or a variation of the pure A-REIT, itself a closed-end trust, via a stapled security, being two or more entities joined together.

So, let’s look at what you may need to consider from a product structure perspective when investing in property.

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Disclaimer: The information contained in this document is provided for educational purposes only, is general in nature and is prepared without taking into account particular objective, financial circumstances, legal and tax issues and needs. The information provided in this article is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. While SMSF Association believes that the information provided in this article is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001.

Ian Irvine - Guest Contributor

Ian has been a keen investor for over 40 years and can draw on his experiences from both investing on his own behalf and also having worked in financial services for more than 30 years. Over this time, he has seen many changes that impact investors’ attitudes to in what and how they invest.

He started his career in what is now referred to as fast moving consumer goods (FMCG) or grocery, working for an Australian margarine manufacturer. In 1986, he was recruited to Westpac around the time of deregulation of the sector, where he spent 10 years before taking a role at AMP and then with ASX for 14 years up to the end of 2017. He continues to be involved with ASX; working on their educational programs.

In 1996, he and his wife established their own SMSF and again the experience and lessons learned regarding managing an SMSF over the years have provided him with many insights and ideas. He enjoys sharing these with others where these are helpful and always suggest that if an investor or SMSF trustee is unsure, that they should seek appropriate advice from a licenced professional.

Ian holds a B. Com (UNSW), and lives in Sydney and enjoys travelling to and meeting investors and SMSF trustee at the educational events with which he has involvement with from time to time.