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Fractionising makes sense for a business on the move. One of the stories I mostly like about the power of fractionalisation was when a major self-storage operator joint-ventured with a property trust many years ago. At the time, I was specialising in the sale of self-storage facilities and acting on behalf of each facility owner. In those days, in the [...]
When properties have a significant future upside, an “opportunity-cost conundrum” is created for investors or developers whether to sell properties before the surge in value arrives. Property Fractionalisation can offer a solution. One such conundrum I see is caused by the Olympics coming to Brisbane in 2032. Still some time away, and, Brisbane is seeing the beginnings of [...]
When properties have a significant future upside, an “opportunity-cost conundrum” is created for investors or developers whether to sell properties before the surge in value arrives. Property Fractionalisation can offer a solution. One such conundrum I see is caused by the Olympics coming to Brisbane in 2032. Still some time away, but Brisbane is already seeing the beginnings of [...]
If you’ve been wondering: what is fractionised co-investment? —you’ve come to the right place. It is a type of investment that has compelling benefits for individual investors. Most investors are accustomed to the idea of buying shares. When you own a share in a company, that means you own a proportion of that company, and are entitled to a slice [...]
Why should you consider co- investing with others? In general, the benefits of co-investment meet many objectives for investors: secure, reliable investments that generate recurring income and enable diversification of holdings. Wholesale Investment Trust, Small REITs & property syndicates are an ideal way to meet these requirements, and are a great way to build a self-managed investment portfolio.
Not many individual investors can buy an $8 million hotel or a $20 million shopping centre all by themselves. Fractionised co-investment, though, offers the opportunity for individuals to do just that! Often the properties chosen for commercial property investment syndication are of a very high quality: multi-tenanted with excellent tenants, long leases, and offering the prospect of above-average returns or [...]
The returns from co- investing can surpass those received from bank deposits, share dividends or ordinary freehold property investments, although returns differ with each. Residential property syndicates usually offer lower returns than commercial property syndicates but their potential for capital gain is often higher.
Unit & shareholders who invest usually receive distribution income every three months, although some syndicates distribute monthly. Monthly distributions are particularly attractive to investors who re-invest these distributions into other investments to take advantage of compounding their returns. Income returns also have the advantage of being net amounts: any expenses that are incurred in running the syndicate have already been [...]
On occasions, investors have made a capital gain or received an extraordinary distribution (in addition to the regular dividends) on the winding up of the investment. Not every investment makes this additional profit upon winding up, though in my experience, it’s not uncommon. As discussed below, capital losses can also occur. Fortunately we have seen few of these for our [...]
Every kind of investing carries risk, and extraordinary adverse events which affect the workings of an investment do sometimes occur. When you co-invest, however, risk is shared across numerous investors. This is a huge advantage compared to outright ownership of a commercial property, where one investor bears all the financial risk. As an extreme example, Covid-19 appeared in early 2020 [...]
Our investors receive a regular flow of information about new properties to be offered for co-investment, with participation in each being entirely optional. We have seen our most canny investors to build their own portfolio and diversity across numerous investments. This diversification can be across different types of properties, for example, industrial, retail, commercial, residential or hospitality. Some of our [...]
It’s not unusual for freehold property owners to be overwhelmed by the relentless management requirements that comes with owning property. Lease management and negotiations, property maintenance, government requirements, regulatory matters and maximising additional profit opportunities can be a full-time job. Co-investments are managed by professional teams on the investor’s behalf, which look after all these. This means that co-investments are [...]
With each investment that we are involved, the manager will outline all features in a proposal document, called a Product Disclosure Statement (PDS). We like to call this document an investment proposal because that is exactly what it is. The PDS will outline the expected features and benefits of investing in the syndicate over the duration of the investment and explain [...]
The most common reason property investments underperform is this: the property itself simply isn’t good enough. That’s why the most important factor in determining whether an investment is worthy of your consideration is the quality of the property. Investors should choose properties that have excellent construction values, quality plant and equipment, and of course, a superior location. Choosing a great property [...]
We like versatile properties because they provide our investors with additional potential if the property needs to be re-developed or extended to suit future needs. Over time, buildings need to be adapted to suit the changing requirements of tenants. Covid19 showed what can happen when change occurs quickly. We saw a fast adjustment in working arrangements as a large proportion [...]
We also like properties which are either tenanted securely or that have multiple tenants. For us, securely tenanted properties mean those with long-leases and/or quality tenants like government agencies. Multi-tenanted investments, like homemaker centres and suburban office blocks, have been star performers over the last few decades. Self-storage complexes, which might have up to 1000 storers paying monthly rent, are [...]
In every type of investing, there are times where the investment plan does not work out the way it was intended. This is true for freehold property investing, as well as for shares, stocks, bonds, and other financial instruments. Co-investments are no different: there can be interruptions to income distributions caused by tenant defaults, rental holidays or maintenance issues. There [...]
The quality of the manager is vital to the quality of the co-investment. Co-investors must make the right decisions at the right time in order to maximise the return to the investors. Smart management will spot opportunities, like the potential for further development of the building, and risks, like potential tenancy issues. Sometimes selling the property earlier than expected may [...]
