UNLISTED PROPERTY TRUSTS STILL AN ‘UNTAPPED’ MARKET

6 October, 2018

Former Colliers International Gold Coast boss Darrell Irwin says young people are ‘missing out’ on the opportunity to leverage growth in South East Queensland’s commercial, industrial and retail markets, with unlisted property trusts remaining a relatively untapped asset class.

Mr Irwin, who has recently become a director for property fund manager Clarence Property, says many young professionals have their wealth creation strategies set to ‘default’ investments in property and listed shares, and are bypassing high yielding unlisted property trusts due to a lack of awareness of the opportunities on offer.

Clarence Property is the fund manager for the unlisted Westlawn Property Trust (WPT), which has a $220 million property portfolio spanning from Yamba to the Sunshine Coast, and has delivered an 22% return to investors last year, with an average return of 14.5% per annum over the past three years.

“Unlisted property trusts are not affected by share market volatility and allow individuals to own a stake in a portfolio of high quality commercial, retail and industrial property, which a fund manager handles on behalf of its investors,” Mr Irwin said.

 

“A lot of young people opt to buy an investment property or shares in a listed company to kick start their portfolio because that is seen as the ‘norm’, but unlisted property trusts often have a relatively low cost of entry – much cheaper than buying a house – and can offer higher yields.

 

“A recent report from Zenith Investment Partners, MCSI and the Property Funds Association showed that unlisted property funds were one of the best performing assets in Australia in recent years, offering returns that were on average three times higher than Australian Equities.”

 

Mr Irwin said unlisted property trusts allowed individuals to diversify their portfolio without assuming the risk of holding, managing and leasing a commercial, industrial or retail asset.

 

“The attraction of unlisted property trusts is the investment in blue chip bricks and mortar – not many individuals can afford or have the expertise to go out and buy a shopping centre or an inner city office building, but they can own a share in one or more through a trust,” he said.

“Even those individuals who do have the potential to acquire a commercial property often turn to unlisted trusts as a ‘set and forget’ alternative – they don’t have to worry about purchasing at the right price, ongoing management and leasing issues, as well as the potential vacancy risks.

“What we are seeing with WPT – and a number of other unlisted property trusts I am aware of – is that the investor base is quite mature, so it seems that younger people perhaps aren’t as aware of this type of investment.

“I encourage them to do their homework and compare the returns on investment with different types of assets. For example, a gross return of five or six per cent in the housing market is exceptional and increasingly difficult to achieve, whereas WPT has a forecast 8.8 per cent gross distribution (year ending June 30).

“WPT has never failed to paya monthly distribution to investors in its 24 years, and many of its assets are located in Brisbane, Gold Coast and Northern NSW so locals can feel confident investing in their own neighbourhood.”

WPT will be launching its next investment opportunity to the market soon at a competitive forecast of 8.8 per cent gross distribution (year ending June 30).

The property portfolio currently includes properties from Yamba to Brisbane across retail, industrial, development and commercial sectors.