The following is an extract from my June 2009 newsletter:

"To the question whether better to invest in shop property direct, or via a property fund, or buy shares in a property company on the Stock Market, the answer is be very careful. With shares you are not only buying a share of the property the company owns, but also the ability of the company to manage itself successfully.

For example, although I have always admired its choice of property, I think how Land Securities Group Plc (LON:LAND) is managed leaves a lot to be desired. Anyone with any experience of the previous Labour government would know that Gordon Brown when he was Chancellor of the Exchequer never gave anything away. Also his timing was exquisite: invariably introducing measures when the impact would be least expected. It needed a while for the REIT framework to be worked out, but to time the introduction shortly before values collapsed meant that had Land Securities had not been in such a hurry to become a REIT it would not have had to pay anything like £300M in tax.

Then there were share-buy backs: at £17-£18 or so, what was that all about? Why waste cash buying hot air when it was obvious the NAV was based on yield compression?

As for Trillium, yes it was capital intensive, but why accept so much less than floating it separately? Surely everyone knows the William Pears Group are only likely to buy when they expect a jolly good return on capital.

As for the 2009 rights issue, deeply discounted, the amount raised is almost equal to how much LS has ‘lost’ in recent years. As for British Land, well what do you expect when the old-guard property expertise retires from the board and bankers are in charge!

The definition of a property fund is, in my opinion, the answer to the question where to sell the sort of property for which no one in their right mind would overpay. A product of the financial services industry, and source of revenue, a property fund is a means of using logic to make money out of the naive.

In 1984, Hugh Jenkins of the National Coal Board Pension Fund said of chartered surveyors “(they) will be continue to be regarded…

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