Money Managers has publicly come out against the Waltus proposal to merge 29 syndicates into one fund, and is urging people to vote against the scheme.
Money Managers is the largest financial planning firm in the country, and it offers syndicated property funds by Dominion Funds.
The main concern over the proposal is that investors can't sell their holdings at a fair market value, managing director Doug Somers-Edgar (pictured) says.
He says investors are better to hold onto their investments until 10 years is up, and then sell their fund's properties and wind-up the syndicate.
That way they continue to get their income and the capital is returned when the buildings are sold.
Somers-Edgar says that under the original syndication deals investors decide at the end of 10 years what to do with the fund.
The alternative is to sell on a secondary market and receive a discounted price. Currently property is heavily out of favour at the market and listed and unlisted property companies are generally trading at a deep discounts of up to 50 per cent in some cases.
Somers-Edgar says the cost of the sale is already provided for in the Waltus accounts and valuations of each syndicate. The right of each syndicate to cause the sale of its property will be lost if the merger goes ahead.
"The only way investors can be guaranteed to get the full value of their building is to vote against the proposal and wait for their property to be sold under the present structure," Somers-Edgar says.
Also, Somers-Edgar is critical of the cost of the $2.5 million cost of the merger (which is paid for by unitholders) and the possible capital gains tax implications.
While Money Managers is advising people to vote against the proposal, Somers-Edgar acknowledges that the firm doesn't have enough clients in Waltus syndicates to influence the outcome of the proposal.
He expects some syndicates, especially the poorly-performing ones, will vote in favour of the merger, however those in the better ones will not agree to the proposal.
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