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Thread: Property share

  1. #1

    Default Property share

    I have an opportunity to by a share in a property syndicate at 70% of original price. approx.60% of present asking price. I realize they are not easy to sell but the return equates to 12%. The lease is due and if it is not picked up my investment would be at risk. The property is good and the company leasing it is one of the larger ones in N Z and have put investment in. The syndicate is one of the Bayley companies and there is about $2000.00 depreciation. Do you think that the opinions in the above article 15/9/99 are still valid for this type of investment?

    Thanks for comments Ed.
    Last edited by revdev; 13-04-2010 at 08:23 PM. Reason: Font

  2. #2
    Join Date
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    Default

    Welcome to the forum Jag. As "one of Bayley's companies" are you talking about IPT Properties?

  3. #3

    Default

    Yes you obviously know your stuff. So are things like this worth investing in long term or are there hidden costs such as fees etc.
    Last edited by Jag; 13-04-2010 at 09:38 PM. Reason: addition

  4. #4
    Join Date
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    Post

    Quote Originally Posted by Jag View Post
    I have an opportunity to by a share in a property syndicate at 70% of original price. approx.60% of present asking price. I realize they are not easy to sell but the return equates to 12%.
    Thanks for comments Ed.
    Jag,

    What is the current valuation? Asking price may not be the best guage of value.

    All the best,

    Niall

  5. #5
    Join Date
    May 2008
    Posts
    3,626

    Default

    Jag, I have some experience with IPT.
    What property is it and what's the asking price? - I can't understand your % figures.
    Where/what is the 'above article 15/9/99'?
    PM me if you prefer.

  6. #6
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    Default In my opinion..

    Quote Originally Posted by Jag View Post
    So are things like this worth investing in long term or are there hidden costs such as fees etc.
    They have their place but there are certainly plenty of people clipping the ticket on the way through thats for sure.

    I did some DD on IPT a couple of years ago, as I was considering one of their proportional offers. Looking through the prospectus, what stuck out was how interconnected the "offerors" and the "advisers" were.
    For example, I remember one of the partners of IPT also happened to be a senior partner in the law firm that prepared the accounts for the proportional title annually. There also seemed to be quite a bit of wriggle room to raise fee's as time went on as well.

    Nothing sinister I'm sure, but enough loose threads for me to have a odd feeling and consequently keep my money in my pocket.

    Maybe at least order a prospectus and do your own DD. It's all good experience.

    All the best

  7. #7
    Join Date
    Sep 2007
    Location
    Auckland
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    8,354

    Default

    I came across this on TradeMe last night: http://www.trademe.co.nz/Trade-me-pr...-264239839.htm

    I assume this is the property you are talking about Jag?

    At first glance the return of 12% doesn't seem too bad. But then I looked at the offerors statement which can be found here: http://www.iptproperty.co.nz/Portals...0Statement.pdf

    And then I saw that there's a big mortgage over the properties and the assumed interest rate is 7.58% which I reckon could go a lot higher. There are also lots of fees for the initiators of the investment - both upfront and on an ongoing basis.

    The leases over the properties seem to run out this July and in 2011 - there's 3 properties. Will they renew? I don't know the answer to this, but I bet it's a factor in the vendor's reason for sale.

    Interestingly all four of the directors of the owning company live in Parnell. One of them owns the law practice being used and another the real estate firm selling these units off (Bayleys).

    So most of the money is being made by these guys I would say. But to be fair all of this is spelt out, along with all of the risks of the investment in the offeror's statement. These units were sold in 2004 and I guess properties were selling like mad then and maybe a lot of people glossed over the risks and only looked at the upside.

    David

  8. #8

    Default

    Your assumption is correct and there are problems renewing the lease.
    Jag


 

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