13 May 2019

Unlisted commercial property trusts are often overlooked as an investment option and are sometimes viewed as secondary to more high-profile forms of investment that attract the lion’s share of media attention, such as investing in the share market or residential property.

But, as research has shown, the best investments are often not the most high-profile ones, but instead are the ones that apply a reliable and tested formula to wealth accumulation.

According to a quarterly report released late in 2018 by Zenith Investment Partners, MSCI, the Property Funds Association and the Property Council of Australia, the unlisted property sector delivered a return of 18.7% over the 2018 financial year, outperforming listed real estate trusts.

Direct property recorded a total return of 11.7% over the 12 months to June 30 this year, while general equities returned 12.9% and Australian real estate investments trusts (listed trusts or REIT) delivered 9.7% return to investors.

This was not the first time that unlisted property trusts had recorded such striking results. In the MSCI report released in February 2018, unlisted property funds averaged total returns of 23.4% for the 2017 calendar year, distinctly higher than the 7.7% return delivered by Australian shares for that period.

In fact, unlisted commercial property has experienced strong returns across the entire decade. Since 2010, total returns including capital growth have averaged nearly 11% per annum.

Furthermore, while in the 1980s, the rental yields on residential and commercial property were tracking at a similar pace, today commercial property has a far higher average rental yield.

As an example of the typical benefits that investors can expect to receive, here are some of the key fund features of our 333 Exhibition Street Property Fund:

• A 6.5% p.a. forecast income distribution yield for FY19.
• Secure, stable income flowing from the University of Melbourne, the building's sole tenant.
• A low volatility investment with quarterly income distribution payments.
• A rare opportunity to invest directly into a CBD commercial real estate asset with potential for capital growth.
• Significant co-investment by the investment manager.
• A managed debt strategy
• A high starting NTA

Our funds give investors an opportunity to invest in commercial property. They allow Australians to buy a portion of a large and quality commercial asset, such as a shopping centre or CBD office buildings, that they would have otherwise not been able to afford on their own, and often with a minimum investment as low as $20,000.

A professional team of highly experienced specialists then actively manages the fund on behalf of all investors.

Furthermore, in 2018 the team was named as a finalist in Money Management’s prestigious Fund Manager of the Year Awards for our NewActon East Property Fund.

If you would like to find out more about any of our funds, or how unlisted commercial property funds are structured, our Director of Investment Services, Bernadette Spiteri, would love to hear from you. Please call us on 1300 132 099.