Investors chase yield in unlisted wholesale funds
The increased allocation is evidenced by the push from the listed sector to create a series of unlisted funds to boost their management fees and offerings to investors.
Mirvac, under the direction of its new chief executive, Susan Lloyd-Hurwitz, has indicated it plans to create a series of unlisted "club funds". Other companies, including Charter Hall Group, GPT Group and Goodman, are also managers of wholesale funds.
Charter Hall's retail division head, Richard Stacker, on Tuesday launched the group's second industrial fund, the $200 million Direct Industrial Fund No.2, aimed at returning a target yield of about 8 per cent.
"Direct property has a compelling investment case and the asset class [industrial] is well placed given the historically large positive spread between property yields and debt costs, long lease and sensible debt and liquidity structures," he said.
The research manager for Charter Hall, Chris Freeman, said a lack of supply for industrial assets and the growth in e-tailing was underpinning the sector.
On the listed side, Folkestone, run by former Mirvac boss Greg Paramor, said the group reported a net profit of $700,000.
Mr Paramor said the company's focus was also on the funds management sector.
"The first half of the 2013 financial year has been very active for the group, which has seen the completion of the transformation of Folkestone from a pure real estate developer to a real estate funds manager, investor and developer," he said.
This was boosted by the takeover of the Austock property funds management business, which gave Folkestone about $560 million in funds under management across four listed and unlisted funds.
"Over the past 18 months, we have sold legacy assets, recycled capital and established a funds management platform that now offers listed and unlisted real estate funds to private clients and a number of institutional investors," Mr Paramor said.
Frequently Asked Questions about this Article…
The article describes unlisted wholesale funds as closed‑end wholesale vehicles that many investors are moving into to seek higher‑yielding returns. Direct property and unlisted funds have been attracting cash because they can offer a larger yield spread versus debt costs and potentially higher income than some listed alternatives.
Mirvac, under new CEO Susan Lloyd‑Hurwitz, has indicated plans to create a series of unlisted "club funds." Other listed property managers active in wholesale funds include Charter Hall Group, GPT Group and Goodman, which also operate unlisted fund management platforms.
Charter Hall launched a $200 million Direct Industrial Fund No.2 aimed at returning a target yield of about 8 per cent, reflecting the group’s view that direct industrial property can deliver attractive income for investors.
Charter Hall executives say industrial property is attractive because there’s been a historically large positive spread between property yields and debt costs, plus long leases and sensible debt and liquidity structures. The research manager also pointed to lack of supply for industrial assets and growth in e‑tailing as key support for the sector.
The article notes a push from the listed sector to create unlisted funds to boost management fees and product offerings. Folkestone is cited as an example, having transformed from a pure developer into a real estate funds manager and acquiring Austock’s property funds management business to expand its funds under management.
Folkestone reported a net profit of $700,000 and said its focus is on funds management. The takeover of Austock’s property funds management business added about $560 million in funds under management across four listed and unlisted funds, helping Folkestone establish a funds management platform.
Yes. The article says Folkestone’s funds management platform now offers listed and unlisted real estate funds to private clients as well as a number of institutional investors, indicating these products can be targeted at both types of investors depending on the manager and fund structure.
Based on the article, investors should pay attention to the fund’s structure (many are closed‑end wholesale vehicles), target yield, lease length and asset type (for example industrial property), the manager’s approach to debt and liquidity, and market drivers such as supply constraints and e‑tailing growth that can underpin returns.
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