Association formed for unlisted property investors
Light of Day, an association for investors in the unlisted property sector, has been formed for those dissatisfied with bank lending practices.
Founder Owen Lennie - who is an investor, a consultant and former fund manager - said that the conduct of the big four banks is threatening the property industry and the superannuation savings of thousands of investors.
Lennie has recently launched a member website as a repository for investor concerns and as an education tool.
"There are about 250,000 individual investors in the sector and we know from phone calls and other email contact that there is a great deal of concern about the issues," said Lennie.
"The aim of Light of Day is to educate the investors about what is going on and to give them some tools to see if they can do anything about it."
Lennie said the current lending policies of some major banks, which have received the taxpayer guarantee, are endangering the stability of $60 billion of investment of their own customers in the unlisted property trust industry through higher interest rates and fee gouging.
Lennie has produced a video explaining the concerns of investors, in which he demonstrates how banks have taken advantage of the downturn. He says that when the valuation of certain properties has reduced, banks have forced unlisted property trusts into higher rates of interest or made the trusts roll over their loan for short periods, incurring excessive fees. This has been done despite the property being well tenanted and the fund managers meeting their interest payments.
Lennie said investors have little recourse because fund managers find their hands tied.
"One of the problems with the loans sector is that although the investors are the beneficial owners of the property, they don't get to find out what's in the loan document," Lennie explained. "One of the things we want to do is say: 'why shouldn't these loan agreements, which have my property as security, be made public?'"
He said if this were the case, investors would be in a much better position.
"Theoretically, they are individual fund and syndicates, and theoretically the fund manager as the responsible entity is meant to look after the investors. But the problem is that [due to a lack of competition and constrained lending] the responsible entity is not in a strong enough position to be negotiating with banks," Lennie said.
Recommended for you
Sydney investment manager Vado Private has welcomed a new director and head of funds management to its team as it seeks to grow its presence in the Australian private credit market.
Clime Investment Management has been appointed by a US investment firm to manage a portion of its multi-asset fund with managing director Michael Baragwanath hopeful that increased revenue can boost its domestic operations.
A potential deal between Platinum Asset Management and L1 Capital may unlock cross-selling benefits but will be unlikely to reverse structural challenges facing active managers, according to Morningstar.
Global fund manager Janus Henderson has reported four consecutive quarters of positive flows and is hopeful of its strategic partnership with Guardian Life opening up new intermediary channels.
