A contributory mortgage fund offering investors the opportunity to invest directly in selected registered First Mortgages over predominately residential but also limited non-residential property in South East Queensland.
Retail Investor
Objective
Income
Asset Class
Property (Listed/Unlisted)
Min. Investment
$10,000
Liquidity
Illiquid
Industry
Banking & Financial Services, Property & Construction
The Fund aims to provide monthly tax-effective income and long-term capital growth by investing in the healthcare sector underpinned by long term leases to a range of reputable healthcare operators.
Defensive childcare asset underpinned by a 15 year lease to one of Australia's most successful childcare operators. The Fund offers a favourable investment structure providing potential for capital growth.
Jameson TTB is an investment manager specialising in private debt and structured equity with a focus on Australian defensive real estate backed transactions. (For Wholesale Investors Only)
Wholesale Investor
Objective
Growth
Asset Class
Property (Listed/Unlisted)
Min. Investment
$100,000
Liquidity
Illiquid
Industry
Banking & Financial Services, Property & Construction
HoldenCAPITAL Partners provides sophisticated investors with the opportunity to invest in standalone, development related, secured mortgage investments. (For Wholesale Investors Only)
Wholesale Investor
Objective
Income
Asset Class
Property (Listed/Unlisted)
Min. Investment
$100,000
Liquidity
Illiquid
Industry
Banking & Financial Services, Property & Construction
The Fund’s strategy is to provide strong risk adjusted returns by providing loan facilities for property investment & development in major cities with a primary focus on residential & commercial projects throughout Australia -For Wholesale Investors Only
Quanta presents 91 Connors Road, an outstanding investment opportunity located in the premier industrial precinct of Mackay on a 3.1 hectare land rich industrial site.
Peak Equities has partnered with the experienced and proven Childcare Developer, TAL Group, to offer a portfolio of three childcare assets in Queensland and Western Australia. (For Wholesale Investors Only)
The Fund aims to: produce an annual dividend yield, before fees, higher than the underlying index (S&P/ASX 300 A-REIT Index) and provide a total return in excess of the CPI + 3% (before fees) over rolling 5 year periods.
The Trust is a fixed term, unlisted property fund that is forecasting a distribution yield of 8% pa and targeting an IRR of 11% to 15% pa (not guaranteed). (For Wholesale Investors Only)
Wholesale Investor
Objective
Growth and Income
Asset Class
Property (Listed/Unlisted)
Min. Investment
$100,000
Liquidity
Illiquid
Industry
Retail, Consumer Products & Food, Property & Construction
A contributory mortgage fund offering wholesale investors the opportunity to invest directly in selected registered First Mortgages over predominately residential but also limited non-residential property in South East Queensland.
Invest in exclusive off market properties at up to 20% below market value, no acquisition costs or holding costs. and you can start from as little as $1,000.
Real Estate Investment Trusts (REITs) & Property Funds
Find and compare listed and unlisted Real Estate Investment Trusts (REITs) and property funds in Australia
Australian Property Funds & REITs
Although many Australians are intrinsically connected to the real estate market through the ownership of their homes or investment properties, the realm of property investment extends much further than just direct residential ownership.
Real Estate Investment Trusts (REITs) and property funds present compelling opportunities for investors looking to diversify their portfolios in income-generating assets. These investment opportunities also offer the advantage of sidestepping the typical expenses and administrative burdens of direct ownership, providing a streamlined approach to property investment.
Ways to Invest in Property:
The traditional approach to investing in real estate, involves purchasing a residential or commercial property with the intention of generating income or achieving capital growth. However, the modern investment landscape also offers a number of alternatives beyond direct ownership.
Property Funds
Property funds, also called real estate funds, are collective investment funds into which investors pool resources to invest in various property-related assets.
Types
These can be listed (traded on stock exchanges) or unlisted (not publicly traded).
Assets
They can invest in a range of assets including direct real estate, mortgages, or securities related to real estate, such as shares in other property companies or trusts.
Strategy
The focus of a property fund can vary widely – from commercial properties to residential or a mix, from income generation to capital appreciation, or a blend of both.
Liquidity
Liquidity depends on the type of property fund. Listed funds offer higher liquidity, whereas unlisted funds might have longer lock-in periods or less frequent redemption opportunities.
Australian Real Estate Investment Trusts (A-REITs):
Australian Rest Estate Investment Trusts, also called A-REITs in Australia, are trusts listed on the Australian Securities Exchange (ASX), providing investors with an avenue to access real estate assets without direct ownership.
Types
A-REITs are listed on the ASX and are publicly traded. There are three main types of REITs in Australia, including equity REITs, mortgage REITs and hybrid REITs. Each takes a different approach to ownership of assets and sources of income.
Assets
Their returns are mainly derived from rental income and potential capital growth when properties are sold.
Taxation
Typically, A-REITs distribute most of their taxable income to investors, which means they can avoid paying corporate tax. Tax liability then transfers to the unit holders based on their individual circumstances.
Liquidity
Given their listing on the ASX, A-REITs offer liquidity to investors, allowing them to buy or sell their holdings relatively easily.
Property Syndicates:
Property syndicates involve a collective of investors pooling resources to jointly invest in property, especially in larger ventures that might be inaccessible individually. Often set up as unit trusts, the stake each investor holds corresponds to their contribution. Managed by an overseeing entity, syndicates offer diversification and access to sizable projects.
Structure
Syndicates can be structured in various ways, but commonly, they are set up as unit trusts, with each investor holding units proportional to their investment. A manager or management entity typically oversees the syndicate's operation.
Risks
While syndicates provide a way to diversify individual risk and access larger projects, they also come with their own challenges. Returns depend on the success of the chosen property or project. Moreover, the syndicate's decision-making is collective or controlled by the manager, so individual investors have less direct influence.
Liquidity
Syndicates might have a defined investment horizon, making them less liquid. Exiting early could be challenging, depending on the syndicate's structure and agreement.
Property Types
There are four main types of properties you can invest in:
Residential Property: properties intended for personal use, such as family homes, townhouses, and vacation properties. Investors often purchase residential properties to rent them out and generate steady income.
Commercial Property: properties primarily used for business purposes, including office buildings, retail spaces, industrial warehouses and factories, storage facilities, and hotels. The lease terms for commercial properties tend to be longer than residential leases, offering investors extended periods of predictable income.
Agricultural Property: land used for farming, cultivation, or raising livestock.
Special-use Property: properties with unique purposes, such as healthcare facilities, educational institutions, religious buildings, or government-held properties.
Comparing Property Investments
When weighing A-REITs against property funds or deciding among different trusts or funds within these categories, these factors can guide an informed decision-making process:
Investment Strategy: Investigate the fund's or trust's strategy. Does it align with achieving capital growth, generating income, or a mix of both? Understand if the manager focuses on specific property sectors (e.g., commercial, residential, retail) or if they diversify across sectors.
Distributions/Dividends: Review the history of distributions or dividends. While past performance doesn't guarantee future results, it can give an insight into the trust or fund's consistency and profitability.
Management Expertise: Evaluate the track record of the fund manager or trustee. Experienced leadership can significantly influence the success of the investment.
Fees and Costs: Understand all associated fees – management fees, performance fees, entry and exit fees, among others. High fees can erode your returns, especially in the long run.
Leverage: Examine the debt levels or gearing ratio of the A-REIT or fund. Higher debt might magnify returns, but it also increases risk, especially if property values decline or interest rates rise.
Portfolio Diversification: Assess how diversified the trust or fund is in terms of property types, geographic locations, and tenant profiles. Diversification can help spread risk.
Liquidity: Especially pertinent for unlisted property funds, understand the redemption policy. How easy is it to withdraw your investment if needed? What are the terms and conditions for withdrawals?
Tax Implications: Property investments can have tax consequences, like capital gains tax or tax on dividends. Understand these implications and how they fit into your broader financial situation.
Market Sentiment and Trends: Although real estate can be less volatile than stocks, it's still influenced by broader market conditions. Familiarize yourself with current property market trends and economic indicators.
Key Features
The main characteristics of property investments include:
Capital Appreciation Potential: Property values tend to appreciate over time, providing potential capital gains for investors. Successful property investors tend to generate most of their investment returns through capital growth.
Passive Income: Both property funds and A-REITs provide potential for passive income in the form of dividends or distributions, which are often derived from rental incomes or capital gains from property sales.
Diversification: Both A-REITs and property funds provide investors with an opportunity to diversify their portfolios beyond traditional assets like stocks and bonds. By spreading investments across various properties or types of properties, the risk associated with investing in individual assets is diminished.
Liquidity: A-REITs, being publicly traded on the ASX, offer a level of liquidity not typically associated with direct real estate investments. Investors can buy and sell units based on market conditions, ensuring easier entry and exit.
Professional Management: Property funds and A-REITs are typically managed by professionals with extensive experience in the real estate sector. This expertise can lead to better decision-making in property selection, development, and management.
Access to Larger Projects: Especially relevant for property funds, pooled resources allow investors to participate in larger, often more lucrative projects that might be out of reach for individual investors.
Key Risks
Investment in property funds and A-REITs involves a number of key risks including:
Market Volatility: While A-REITs offer liquidity, they're also subject to market fluctuations, which can lead to price volatility in the short term, potentially affecting the investment's value.
Interest Rate Sensitivity: Real estate investments, including A-REITs and property funds, can be sensitive to interest rate changes. A rise in rates can increase borrowing costs and potentially depress property values.
Lack of Control: Investing in A-REITs or property funds means entrusting decisions to fund managers or trustees. Investors don't have the same level of control as they would with direct property ownership.
Economic Factors: Economic downturns, shifts in property demand, or changes in the regulatory environment can impact property values and rental incomes, influencing the returns of both A-REITs and property funds.
Liquidity Concerns for Unlisted Property Funds: While A-REITs offer liquidity, unlisted property funds may not offer the same flexibility. Investors might face lock-in periods or restrictions on withdrawals.
Concentration Risk: If the A-REIT or property fund has a significant portion of its investments in a particular type or location of property, it may be more susceptible to downturns specific to that sector or region.
Conclusion
Investing in property through funds or A-REITs can be a strategic way to access the real estate market while mitigating some of the challenges associated with direct ownership. Whether considering A-REITs, property funds, or unlisted trusts, it's crucial to conduct thorough research, understand the investment's strategy and risks, and align it with your financial objectives and risk tolerance.
By diversifying your portfolio with real estate investments, you can potentially benefit from income generation, capital appreciation, and professional management, all while spreading risk. However, like any investment, there are no guarantees, and it's essential to stay informed about market conditions to ensure you make informed decisions.
FAQs:
A property fund and a property trust are similar in that they both pool investors' money to invest in property assets. The main difference is in the legal structure. Property trusts are structured as trusts, while property funds can have various legal structures, such as unit trusts or managed funds.
No, property funds and trusts cater to a wide range of investors. While some may target institutional or high-net-worth investors, many are open to retail investors with lower minimum investment requirements.
Returns typically come from rental income, capital gains on property sales, or a combination of both. These returns are distributed to investors in the form of dividends or distributions.
Listed property trusts or funds are publicly traded on stock exchanges, offering liquidity. Unlisted ones are privately held and may have lower liquidity. Listed property trusts are subject to stock exchange regulations, while unlisted ones have other regulatory oversight.
Yes, property funds and trusts can be excellent diversification tools. They allow you to access real estate assets without the full ownership burden and can complement a portfolio of traditional stocks and bonds.
Assess risk factors such as the fund's or trust's investment strategy, leverage levels, fees, and the track record of the management team. Diversification across properties and regions can also mitigate risk.
Tax treatment varies by country and the specific structure of the fund or trust. In many cases, you may be subject to capital gains tax and income tax on dividends or distributions. Consult a tax professional for personalized guidance.
This article contains information of a general nature only, and should not be regarded as advice, either general or personal. Anybody considering investing in property funds or REITs should seek professional financial and legal advice prior to making investment decisions.
