Property exchange to hit the boards
An Australian property exchange will be launched within months and comprise 16 founding members made up of listed property fund groups, according to Property Funds Australia (PFA) managing director Chris Morton.
The idea for the exchange is being driven by the Australian Direct Property Investment Association (ADPIA), of which Morton is also chairman, with 16 of its listed trust members registered as foundation members of the exchange.
These include York Capital, Austock, MCS, Paladin, PFA, Grange Securities, Waltus and Landwork. A large bank is also said to be involved but Morton would not name the group until further developments had been concluded.
Four additional members have been added, with a total of 20 members at the time the register closed.
Morton says the reason for the launch of the exchange was the need for liquidity in products like property syndicates.
"There was a need to create listing rules that was linked to property. Listing these funds on the Australian Stock Exchange (ASX) has an effect on yields and performance becomes an asset in that environment," Morton says.
"These funds are generally bought by long term holders and the necessities of the market are important but not critical."
Morton says there was also a desire to slow down the sell process to reduce volatility in the listed property market and to cut down arbitrage.
"The listing rules will be in line with the property assets on the boards and the exchange will treat them differently than other asset classes, in recognition that this sector works differently," Morton says.
APX director Rod Keown says the exchange will pick up a number of the funds listed on the Australia Exempt Property Market (AEPM) when it is launched.
APX will also takeover some responsibilities from the AEPM, where each product brought onto the bourse must be approved by the Australian Security and Investments Commission (ASIC).
"This is difficult to do and ASIC has encouraged the formation of the APX who will takeover the approval of products prior to listing," Morton says.
"Smaller listed property trusts should question the logic of being on the ASX if they have a turnover of less than five per cent but still paying listing fees of $30,000 plus compliance," Morton says.
He hopes these funds will come across and list on the APX which he says will operate in much the same way as other secondary boards.
Keown says the final listing rules will be lodged with ASIC in three weeks and expects the exchange to be operational before the end of the year with 100 products listed within 12 months.
AUTHOR
Jason Spits
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