Content provided by Primewest Group Investor Relations
Unlisted Trusts offer investors the opportunity of investing in various commercial properties eg. Office buildings, Shopping centres, large format retail, Agriculture, tourism, industrial/logistics etc.
Unlisted trusts give investors the ability to invest in this type of asset without the large costs involved in purchasing these assets.
Typically the trusts will raise a percentage of the money from private investors and the balance will be loaned from the banks.
Unlisted Trusts will issue a comprehensive information memorandum which covers all the details of the property which ensures potential investors are well informed.
It is important to understand that unlisted trusts are a long term investment but typically pay a regular income return and at the end of its term or sale will distribute any capital gain to the investors (This gain plus the income will typically be expressed as a total return or internal rate of return the IRR ) IM’s will estimate the yield and the IRR.
Like any other asset class there is of course risk and each investor like any other investment will need to weigh up the risk and make their own decision or seek advice from a Financial Planner.
If you are considering this type of investment you would also want to know the WALE (weighted average lease expiry) Obviously long leases are a more attractive investment for many as it provides more secure long term income stream.
The quality of the tenant is of prime importance , for example in a shopping centre you would want so see one of the majors like Coles as an anchor. You might also want to consider what percentage of the total rent of the shopping centre is coming from the majors that are generally public listed companies.
Some unlisted trusts have several assets and some are single asset trusts. A single asset trust lets say an office building leased entirely to a Govt department for example for a 10 year lease could be an excellent and secure investment, it may offer a smaller return but the risk could be considerably lower.
In this current low interest environment SMSF investors are always looking for investments that offer a fair return with acceptable amount of risk and regular income especially if you are in pension mode.
Unlisted trusts will in most cases have the ability for you to make personal contact and gain further information and assistance. This would probably be worth checking before committing to an investment.
In conclusion, investors looking to diversify their SMSF maybe feeling nervous about the amount of investment in equities then unlisted trusts may also be well worth considering.
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Disclaimer: The information contained in this document is provided for educational purposes only, is general in nature and is prepared without taking into account particular objective, financial circumstances, legal and tax issues and needs. The information provided in this article is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to your individual circumstances. While SMSF Association believes that the information provided in this article is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001.