Authorized property unit trusts and the Canadian experience

Abstract

The first authorized property unit trusts in the UK were created in September 1991, and have operated unspectacularly since then, as the current property climate has not, in general, been encouraging. Similar Canadian investment vehicles first appeared in the early 1980s, and experienced significant growth through the property boom of the mid‐1980s. Since then, with decreasing property values many of these funds have been forced to reorganize. Yet, the structure of the Canadian funds would have complied with the most significant aspects of the UK regulations. The consideration of the nature of the manifold difficulties of the Canadian funds suggests that the regulations established in the UK may not prevent similar problems. Accordingly, the specifics of the Canadian funds and the manner in which their structure added further levels of risk to that inherent in their underlying assets should be considered relative to the possible future performance of similar vehicles in the UK.