Industry guidelines will enhance industry consistencyAcquisition costs typically represent a material percentage of the purchase price of an asset. These costs are borne by unit holders that have an interest in the fund at the time the asset is acquired. Acquisition costs are not incurred by new investors when new equity is raised even though these investors enjoy the returns associated with the underlying assets. This gives rise to a number of issues including inequitable treatment between existing, joining and leaving investors within a single fund. In addition, funds have different methods of reflecting acquisition costs in the fund’s unit price which makes it more difficult for investors to compare funds.The Property Council of Australia has developed a practice note which outlines voluntary best practice for reflecting acquisition costs in the unit price of unlisted property funds. The practice note proposes two alternate methods for reflecting acquisition costs in fund unit price to improve comparability between funds, promote industry consistency and achieve greater equality between unit holders within a single fund.For more information, contact:Andrew Mihno, Executive Director, International & Capital Markets ([email protected] or 02 9033 1944)
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