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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: David Culver who wrote (11)	11/21/1997 7:57:00 PM
From: WINDSURFER50	Read Replies (2) \| Respond to of 11633

Well, remember, I'm just the messenger. I didn't write any of the following - it was a money manager - Burgundy Asset Management, and I don't really even know who they are. And here it is, paraphrased (because I don't like to post other people's press releases verbatim). *** TORONTO, Nov. 11 /CNW/ - The public markets for income trusts in Canada are headed for deep trouble that will hurt investors and damage the reputation of Bay Street concludes the November 1997 edition of The View From Burgundy, a quarterly newsletter published by Burgundy Asset Management Ltd. Describing income trusts as an ''incredible piece of financial alchemy'', the newsletter states that the manner in which they are structured in Canada creates an investment vehicle that sells the downside to investors while largely shielding management from accountability for their decisions. - an unholy mess in the Canadian public markets for income trusts - the lowest quality ones will go out of business entirely - a large number of mediocre ones will reconvert to corporate form - naive peoples' savings will be lost.'' - income trust sellers are realizing insane prices for assets - but they keep control of those assets under conditions ensuring management cannot lose - they entrench management - for management, it's a dream come true!' - in Canada the relationship of an income trust unitholder to management is characterized by a structure that places management outside the trust - this deprives the unitholder of any influence on the trust's management - it is compounded by management-conceived incentives detrimental to unitholders - it cites the recently launched Legacy REIT which illustrates the problem - mind and management of Legacy are OUTSIDE the trust in the CP Hotels Management Corporation' - the management company charges 3% fee on hotel revenues - etc., etc., etc. - what if you buy Legacy and become disenchanted with the arrangement? Can you change it? No. - CP controls trustee nomination through holding of 1/3 of units - trust governance seems to maintain CP control over assets - the REIT realizing a monumental price for the hotels - it creamed off a good portion of the upside - unitholders are a straw man - unitholders have no management team working for them - they have no control over their destiny - no power to change anything important.'' - this arrangement was common in the U.S. during the 1970s and 1980's - the inevitable conflicts of interest which occurred forced the reorganization of the U.S. income trust industry - income trusts in U.S. now have management accountable to unitholders by residing INSIDE the trust - this upholds the fundamentals of investor ownership with management running the firm on the unitholders' behalf. - U.S. investors shun arrangements like the Legacy Hotels REIT, due to bitter experience - Canadians will have to learn the same lesson - Burgundy Asset Management Ltd. is an independent investment management company. For further information: Tony Arrell, Chairman, (416) 879-3222; Richard Rooney, President, (416) 869-3222 ******* So that's what I read. I'd love to see all their points discussed here for all our enlightenment.