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The Commission released a review on the syndicated property market last week (see earlier story). While it stopped short of recommending any regulatory changes, saying that the law relating to offer documents was "adequate" for offers of interest in commercial property, it criticised the way some promoters were applying that law.
Some key areas of concern were the disclosure of rates of return (the bases and qualifications relating to those), the disclosure of major assumptions underlying prospective financial information and the disclosure of risks associated with the investment.
Hodge said that Waltus had supported the review when it was first announced six months ago and made a detailed submission. However, he said it was "too wishy-washy".
"They've said that more disclosure is required but they really haven't been specific enough.
"There have been a few instances where syndicates have come to the market (with an offer) for no other reason than they're unable to sell a property in the market. In Australia, to promote any securities by way of a prospectus, you must be licensed and you must lodge a bond with their securities commission of 0.3 per cent of your assets under management: that would certainly limit the one-off players.
"For example, in New Zealand we have around half a billion dollars (of assets under management), so we would have to have $1.5 million as bond.
"I'm not advocating the Australian operation holus bolus, but it certainly has some merits."
John Crone, a director of St Laurence Asset Management, also thought the review was not specific enough. He said that a number of property offers had been made which could be described as misleading, yet the Securities Commission review didn't seem to provide any strong direction on what they should do: "It almost seems to say it's up to the promoters to make a call".
"The industry is quite happy to accept some guidance - and this (review) doesn't really provide it," Crone said.
To read the Securities Commission's review on offers of unlisted interests in commercial properties, click here
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