Last week an irate shareholder in listed property company Fairvest complainedto the JSE Securities Exchange SA (JSE) that the company was a "disappointmentand disaster".

In a letter to the JSE and Business Day, Alex Romer said: "Some investmentexperts tell us one cannot go wrong when investing in real estate, well,then they have clearly not had the privilege to invest in listed real estateshares such as those of Fairvest."

This is not the first time a listed property company has come underfire from shareholders after a disastrous performance during a time whenlisted property is a top-performing sector on the JSE.

The question many first-time property investors must be asking themselvesis how they can avoid similar experiences.

Romer was responding to an independent auditor report, included in thecompany's 2003 annual report, which said about 4,9million shares that Fairvestheld in another property company, Bonatla Holdings, were "unaccounted forat September 2003".

Furthermore, a 50c distribution owed by Bonatla Holdings to its shareholdershas not been accounted for.

This means more than R2m is owed to Fairvest .

Mariette Warner, fund manager of Stanlib Property Income Fund, saysthat given the bad experiences that investors have had in some listed propertycounters, there are certain elements that, if investigated thoroughly,make it easier to identify high risks.

Warner says that in the case of an existing listing, it is essentialto analyse the track records of the company and its management , as wellas the experience of members of the board.

She says it is also essential to discuss with management its plans forthe company.

"Should answers be evasive, it should be avoided," says Warner.

She says that in the case of a new listing, the same issues apply ."It is also crucial to read the prospectus thoroughly.

"Valuation methodologies vary considerably. The quality of valuationsalso depends on the mandate given to the valuer."

Warner says that reading the valuer's letter in the prospectus makesit easy to identify the quality of information provided to the valuer,the level of independence afforded the valuation and therefore the impliedrisk.

Warner makes mention of Sanlam's listing, Miccprop, saying it has donewell because of the quality of information provided to the valuer and thedepth of the mandate, which allowed the valuer access to the correct informationand independent outcome.

She says investment experts who say you cannot go wrong in real estateare clearly not real investment experts.

"If investors in listed property do not have expertise to identify risks,they are far better off investing in vehicles managed by investment professionalsregistered as fund managers with the Financial Services Board."

Business Day