Property trusts: listed vs unlisted

Wednesday, 4th Nov 2015

listed trustProperty trusts are generally offered in two forms – listed or unlisted. But what’s the difference and the pros and cons of each?

Property trusts allow investors to gain access to larger, higher yielding investment opportunities at significantly lower price points than they could buying directly on their own.

Typically, trusts are either listed, in which they’re traded on a stock market (such as the Australian Securities Exchange), or unlisted, in which they’re privately held and there is no public market.

Investors in listed trusts can buy or sell at any time – the same as they would trade shares on the stock market.

While this may have its advantages, it can also mean that the unit price can be more volatile as it imitates the share market rather than the property market.

Conversely, investments in unlisted trusts are usually locked in for the duration of the trust. The duration of an unlisted trust depends on its type, for example commercial acquisition or development.

An unlisted trust may only hold a single or a small number of specific assets.

Asset can only be bought or sold in the parameters set out in the trust constitution, and some decisions require a vote by unit holders (i.e. the investors) with voting rights in proportion to each investor’s interest.

There are pros and cons to each form of trust and individual investors must determine what the best fit is for them.

Listed property trusts Unlisted property trusts
·         Buy or sell at any time

·         Unit price can be volatile and imitate share market

·         Capital locked in for duration of trust

·         Unit prices less volatile and imitates the property market