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I note that a number of listed REITs also have Property Managed Funds. Apart from the ability to put smaller amounts into listed REITs and greater liquidity, but possibly more price volitility, are there any significant differences – esp. risks – if one is looking at the larger managers – e.g; Centuria, AMP, Cromwell etc?
A: The two main risks are single asset risk (less diversification), and the exit plan. How does the Fund deliver a liquidity event for its unit holders? The latter obviously comes down to the quality of the building, tenant profile, and marketability.
I think that when looking at these funds, the most important thing to consider is the manager’s strategy to improve the value of the building and/or why that building will improve in value due to its location/market factors. I am a big fan of these trusts – but there are also a lot of costs (including stamp duty) to be recovered before you will derive a positive capital return.
