Commercial Property Funds have gained significant attention as viable investment vehicles in the real estate sector.
They allow investors to access diversified property portfolios, offering the potential for capital growth and income generation.
What are Commercial Property Funds?
Commercial Property Funds are investment vehicles that pool capital from multiple investors to purchase, develop, and manage commercial real estate properties.
These properties may include offices, retail spaces, industrial buildings, and mixed-use developments.
Commercial Property Funds aim to provide investors with returns through rent income and property appreciation.
Types of Commercial Property Funds
Commercial Property Funds can be categorised into several types:
Open-Ended Funds: These allow investors to buy in and divest at regular intervals, offering liquidity.
Closed-Ended Funds: These are structured with a fixed number of shares and typically have defined investment periods, often leading to less liquidity.
Real Estate Investment Trusts (REITs): Publicly traded investment funds that primarily invest in income-generating real estate, offering easier access for individual investors.
Private Equity Real Estate Funds: These invest in private real estate transactions, usually requiring larger minimum investments and targeting accredited investors.
The three main features of Commercial Property Funds are:
Diversification: Commercial Property Funds typically invest in a variety of properties, reducing risk exposure.
Professional Management: Experienced fund managers handle the acquisition, management, and disposition of properties.
Income Generation: Providing opportunities for regular income through rental yields.
Risks of Commercial Property Funds
There are three main risks of Commercial Property Fund investing:
Market Risk: Commercial real estate is subject to fluctuations in market demand and rental rates which can both impact property values.
Illiquidity: Some Commercial Property Funds, especially closed-ended funds, may have limited liquidity, making it difficult to access funds quickly.
Management Risk: Performance is dependent on the expertise of fund managers.
How to Compare Commercial Property Funds
When comparing Commercial Property Funds, investors should consider the following criteria:
Historical Performance: Analyse past returns relative to benchmarks and competitors.
Fees and Expenses: Examine management fees, performance fees, and any entry/exit costs.
Property Portfolio Composition: Evaluate the types of properties owned and geographic diversification.
Distribution Yield: Assess the yield on dividends paid to investors.
Investment Strategy: Understand the fund’s approach to acquiring and managing properties.
Ways to Invest in Commercial Property Funds
Investing in Commercial Property Funds can be done through various channels:
Direct Investment: Purchasing shares in specific Commercial Property Funds or REITs via stock exchanges.
Investment Platforms: Utilising financial advisors or online platforms that specialise in real estate investments.
Private Placement: Engaging with private funds or ventures for larger investments, usually targeting accredited investors.
Superannuation: Listed REITs can be held in Superannuation.
Robo-Advisors: Utilising automated investment services that include Listed REIT allocations in their portfolios.
Self-Managed Superannuation Funds (SMSFs): Investors may include REITs and other Commercial Property Funds as part of their self-managed retirement strategy.
Investing in Commercial Property Funds FAQs
Commercial Property Funds include a range of property types, including office buildings, retail spaces, industrial properties, and mixed-use developments.
Commercial property carries risks, including market volatility and management quality.
As an asset class, it’s generally regarded as medium to high risk.
Commercial Property Fund returns are measured through dividends from rental income and the appreciation of the fund’s assets.
This varies by fund, but some have minimums as low as a few thousand dollars, and certain platforms allow fractional investments.
Commercial Property Funds fees can include management fees, acquisition/disposal fees, and performance fees.
Liquidity varies. Open-ended funds generally offer more liquidity than closed-ended funds.
It depends on the fund structure. Open-ended funds typically allow withdrawals, while closed-ended funds do not.
Investing in Commercial Property Funds Conclusion
Commercial Property Funds present an accessible avenue for investors seeking exposure to the commercial real estate market.
They offer a combination of diversification, professional management, and potential income generation.
However, potential investors should thoroughly evaluate Commercial Property Fund types, features, risks, and performance metrics before committing capital.
Informed decision-making is crucial when navigating this investment landscape.
The Trust is an open-ended unlisted property trust that invests in a diversified portfolio of direct commercial properties to provide a regular and competitive level of tax advantaged distributable income combined with the potential for capital growth.
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
FRP Capital presents its latest investment opportunity – the Brickworks Marketplace Fund. Access this iconic South Australian sub-regional shopping centre through our exclusive single asset Wholesale Fund.
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.
The Fund is an open-ended fund which strives toward a goal of offering stable returns to investors through access to a diversified portfolio of industrial assets (For Wholesale Investors Only)
The Fund aims to provide quarterly income and the potential for long-term capital growth. A single point of access for investors to a portfolio of quality Australian commercial properties.
We provide wholesale investors access to commercial real estate opportunities; deliver strong, stable and sustainable quarterly cash distributions (typically 6.5%+ p.a.) and target total returns across a 5–7-year timeframe of 11-12% p.a.
The Fund is an open-ended unlisted property fund that aims to provide investors with a long term secure income yield with exposure to strong underlying growth fundamentals. (Wholesale investors only)
