Book Review > Super Safe Investing in Syndicates and Listed Property Trusts - 7th Edition

Super Safe Investing…in Syndicates and Listed Property Trusts…seems an oxymoron of a title? How can investing in something not 'main stream' be 'super safe'? If it were, every moron would be doing it…right?
So you can see why I was keen to have a look at this book…
It is a handy little book and a wonderful guide to get started in something you may not have thought of before.
Syndicates are not as 'liquid' as shares, but not as burdensome as property - well, they ARE 'property', but you share the 'burden' with others, you sell if you want out, and you have a piece of, say, a swanky hotel, or a shopping centre, for, say, $5,000-$10,000. Your annual return might be 9-11%, and if the property is new, depreciation allowances might see your tax bill deferred by maybe 4 years.
Even Kerry Packer is doing it!
The book gives an informative précis, with phone number and web site addresses, of all the major professionals in the business of syndicates - funds managers who buy a shockingly expensive property, with 'blue chip' tenants, who then 'sell off' part of the pie in a 'syndicate', ie you and I get a chance to buy into the deal, for a set price.
It's not 'big bikkies', but it's not exactly for the faint hearted either - a $10,000 stake is a lot more serious venture than a couple of thou worth of Telstra!
But investors are snapping up the pieces to the puzzles, and they're not limiting themselves to $10,000 stakes - and, the property syndicates have had some spectacular returns, not surprising given the recent/current property boom.
When the heat dies down, will those who have tied up considerable funds in property syndicates be reduced to 'flat' returns, while those who have funds ready to plunge into the renascent share market reap the greater rewards?
Not according to author Tim Hewat.
His research indicates that in the current environment of low interest rates, a stable outlook for quality properties and a desire on the part of investors to diversify out of equities, the time for syndicates is coming rather than going.
The second half of the book is devoted to Listed Property Trusts (LPTs), which Hewat believes will entice even more investor dollars than syndicates, since the half a million Australians already into the LPT market already own nearly 1000 commercial properties valued at $60 billion!
'Listed property trusts have outperformed all other asset classes over the past five years. While they can pose difficulties for professional managers, individual investors find them a safe bet." - Barrie Dunstan, Australian Financial Review
'Volatile world markets, massive mistakes costing billions, and scandalous golden handshakes amounting to millions for the departing incompetents are more than shareholders in some once-mighty blue chip companies can stand; understandably these investors have started to take refuge in the dull-but-successful safe havens of listed property trusts' - Tim Hewat
LPTs are basically investment companies, eg, Centro, CFS Gandel, Westfield America, James Fielding, that own a portfolio of investment property, they pay dividends, they are listed on the ASX and their prices fluctuate with supply and demand
According to Hewat, also the author of the best selling 'Intelligent Investor's Guide to Share Buying', when you're looking to buy LPTs, you would make your choices on the same basis you might make your equities choices:
Diversification - buying more than one LPT;

• Big Caps - there are about 20 LPTs in the top 150 companies by market capitalisation listed on the ASX;
• Low P/E ratios, less than 12, hard to find, even in a bear market, but they do exist;
• Price to NTA less than 1 - again, not many of them, but you can still buy a dollar's worth of Carter Holt Harvey for 60c, a dollar's worth of Challenger International for 80c, etc;
• Good Dividends - hoping for around 10 per cent;
• Continuous Payouts - dividends for 5 years without interruption, and get rid of any share that misses just one dividend; and
• Stop Losses - Hewat suggests limiting your loss to 6 per cent to keep most of your money intact.

Hewat points out that not all LPTs are having it easy - the office sub-sector is struggling, while residential and retail are thriving.
Then again, in the unpopular Hotel and Leisure sector, share prices have been averaging 61 cents, while the average yield was a high 11.1 percent; in the most popular retail sector, the average yield has been a modest 7.28 per cent while the average share price was $2.31.
Hewat ends his book with a table of 24 LPTs he considers 'worthy of attention.'