Property & Infrastructure Funds warning about Australian Unity property trusts

Discussion in 'Shares & Funds' started by andrewf__, 10th Mar, 2018.

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  1. andrewf__

    andrewf__ Member

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    I own an unlisted property trust investment via Australian Unity.
    Based upon my experience with AU regarding my investment, I would NEVER purchase any other product from them (including health insurance) and consider it a duty to warn others of their intransigence.

    Their policies and actions regarding the withdrawal of units from an investment, while not illegal, is clearly unfair and inequitable.
    They say it is not unfair. I don't know whether they truly believe that, or just don't want to admit it and do something about it. (Unfortunately the Financial Ombudsman only addresses illegal acts, so that is not a recourse.)

    The Trust Manager has yet to answer my letter emailed to Australian Unity on 24 Nov 2017.

    Instead of directly addressing the issues I raise, other peoples' emails (including a General Manager) include red-herrings and bureaucratic babble which do not say anything.

    Several weeks ago I asked for the Trust Deed, was told it would be emailed, but have not yet received it.

    One should consider my experience as well the recent ACCC findings regarding AU's misleading behaviour in respect to dental coverage when considering whether or not to trust them with you health insurance.
    Australian Unity to compensate some members over dental benefits
    Australian Unity Health Limited - s.87B undertaking

    In my view, because of their lack of judgement and lack of customer service orientation, I would never put myself at their mercy by paying them for health insurance, dental services or aged care/retirement accommodation.

    My issues Details:
    Out of necessity, they must limit the amount of quarterly withdrawals from an unlisted property trust. I have no issue with that. They apportion withdrawals based upon the size of the investment.

    BUT, they insist one reapply for a withdrawal each and every quarter, instead of just once at one's maximum investment level.

    They then use the OUTSTANDING BALANCE of the investment to approtion the payout each quarter, NOT the original balance. As a result, the amount of payout a larger investor is entitled decreases as their holdings decrease. So, as an example, it might take years for a $20k holding to reduce to a $10k holding. When their holding is at $10k, the (originally $20k) investor receives as much payout as someone who now starts withdrawing but has only $10k invested. Therefore, the larger the investor, the longer it takes them to withdraw their units.

    I have been withdrawing for more than four years. At this rate, it will take eight or ten years to complete the withdrawal. Had it been done more fairly, it would have taken approximately three years maximum.
     
  2. monk

    monk Well-Known Member

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    Sounds like they're not doing too well if they're limiting withdrawals.
     
  3. andrewf__

    andrewf__ Member

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    It is a "closed" trust. I therefore have no issue with there being a policy of limiting withdrawals.

    The issues I have is how they administer it. It demonstrates lack of forethought.

    No one is perfect, so it is their lack of willingness to see their method is flawed (because of its unfairness and inequity) and their lack of willingness to resolve the issue which perturbs me . . . and motivates me NEVER to trust their judgement in any other matter (product).
     
  4. RonOne

    RonOne New Member

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    Sorry Andrew F. It is an UNLISTED property trust. Most have no withdrawal facilities, at least AU have some. Some unlisted trust managers administer well. Some look for someone to buy your units. Have you ask AU of they would advertise your units to other unitholders ?
     
  5. paddy55

    paddy55 Member

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    AU has a Propert Fund -Growth. During the GFC, it lost 90% of its value. It recovered to around 20% of pre-GFC value. The reason for the downfall was ) highly geared but fact not disclosed in prospectus or annual reports, b) no plan B as what to do in the case of a major downturn.
     
  6. RonOne

    RonOne New Member

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    Paddy, sounds like you need to learn how to read a PDS or IM.... The gearing ratio is easy enough to calculate..
     
  7. paddy55

    paddy55 Member

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    Hi Ron, no doubt you are right. But I do not remember a Balance Sheet being published for the individual Fund, only one consolidated one for the company.
     
  8. andrewf__

    andrewf__ Member

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    RonOne,
    Your comment is irrelevant.
    They DO have a withdrawal facility.
    The problem is that is administered badly.
     
  9. qak

    qak Well-Known Member

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    This seems pretty fair to me - otherwise the two holders with the same investment will get different amounts. How is that fair?

    This way will cost less to administer, rather than having to trace back to original investment amounts or values.
     
  10. andrewf__

    andrewf__ Member

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    Based upon your response, I don't think you understand.
    They way they do it, the person who has a smaller investment gets the same dollar payout as the person with the much larger investment who started withdrawing from the fund many years earlier.
    This happens because they insist upon a withdrawal application being made each quarter, and base the new payment on the PRESENT balance, not the original balance.
    So, a person with 10k investment might take 5 years to be paid, while a person with a 20k investment might take 10 years to be paid and a person with a 40k investment might take 15 or 20 years to be paid.

    In my view, to be fair, the amount paid out should be based upon one's original balance, not the outstanding balance.
    Do you understand now?
     
  11. qak

    qak Well-Known Member

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    But that's only YOUR view.

    In MY view, it's fair that the payouts each period are based on the current/remaining balance.

    If these 3 people put in the same (assume) full redemption requests each period, the fund will allocate the amount available for redemption on a proportionate basis each period. If they have $7K to return in a quarter, they won't say each person each person gets $2.33K. In your example, the $7K is returned as: $1K to $10K investor, $2K to $20K investor & $4K to $40K investor.
    They will all be repaid at the same time.

    Do you understand now?
     
  12. andrewf__

    andrewf__ Member

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    So you reckon a person with a larger investment should have to wait (perhaps) many times longer than a person with a small investment to get a payout?
     
  13. qak

    qak Well-Known Member

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    But they won't be waiting any longer, that's the point. Any amount returned is shared on a proportionate basis. A simple example where 50% of the outstanding amount is returned to investors two periods running. A started with $50K, B started with $1K.

    A: $50,000 - (50% x $50K) - (50% of new balance $25K) = $12,500 (ie now has 25% of original left)
    B: $1,000 - (50% x $1K) - (50% of new balance $500) = $750 (ie now has 25% of original left)

    They end up with the same proportion of their original investment!

    Of course, if the 50% returned was of the original investment (ie your method), they would have both been fully repaid after the second return.