Barter exchange company BBX Holdings is set to list a property investment fund on the Newcastle Stock Exchange.
Last year BBX floated on the Australian Stock Exchange, BBX’s chief financial officer Tim Creasy said that move placed the company in an ideal position to capitalise on the market potential.
“The company has identified member investors as well as property developers attracted to the concept of selling part of their projects into the fund and exchanging equity in their property for shares. Those shares will ultimately be tradeable on the Newcastle Stock Exchange.
“The BBX Property fund is unique as it will be the only fund that utilises barter currency. This is done both at the investor level and when acquiring properties for the fund.
“In consultation with our legal taxation advisor, BBX has developed a structure that will have significant benefits in wealth creation for its members and their businesses,” he added.
BBX has established a separate listed property investment entity, BBX Property Investment Fund Ltd., so that members can invest in a portfolio of properties with a suitable level of gearing.
“Our target is to utilise 33% barter currency, 33% cash and 33% debt funding in making property acquisitions around Australia and New Zealand, predominantly apartments and units where a degree of oversupply currently exists.
“As the properties rise in value so will the underlying value of the shares. This fund will invest in a diverse and fully managed portfolio of residential property and it can, if structured properly, be an investment for superannuation funds. BBX also provides interest-free overdrafts to qualifying members for working capital and for investment in property, which is a feature unique to the trade exchange.
“Members can utilise the funds in their account and in most cases BBX can extend that with an overdraft to enable them to acquire such a property investment in a number of ways including for their superannuation fund. BBX is getting a team of independent consultants and advisers together to advise new & potential members of the unique features of this investment and the possible taxation advantages,” he said.
“We’ve chosen the NSX to list this vehicle because the requirements are more flexible and suited to this type of fund. If the fund grows as expected we have a strategy to list on the ASX within 12 months. Using barter currency is just like using cash, you tick the appropriate boxes and BBX transfers funds from your account to a share application in the property fund,” he said.
BBX members already transact around $100 million trade on an annual basis and the company is the second largest barter operator in Australia, facilitating the ‘cashless’ trading of goods and services between members.
A trade exchange uses trade dollars, which have par value with the local currency, to assign value to the transactions that take place between members. In essence, the exchange acts as the third party facilitator and record keeper, and issues members with monthly statements, showing the purchases and sales they have made during the month. They also use plastic charge cards similar to other credit/debit cards in order to conduct business.
The company is also negotiating the establishment of master franchises in South East Asia.
By Adam Parsons
