Is commercial property on the cards for your portfolio?
As most of us are aware property investment can offer investors relative capital stability, incomes at a higher level than traditional cash based investments, a cushion against inflation and can balance out volatility in your portfolio from equities and other assets with more risk.
In trying to achieve a good balance within your investment portfolio, the inclusion of property is an important consideration. Generally residential property is the first thing that springs to mind, given it is what so many of us know. However, there is additional risk in having too much concentration within residential property.
Commercial property on the other hand gives investors access to larger buildings with yields that are usually greater than residential property. Unlike other asset classes, which have faced an uphill battle created by issues such as falling interest rates and share market weakness, unlisted residential property in Australia has consistently delivered yields around seven percent p.a. over the last couple of years. In turn investors have been receiving regular returns.
Unfortunately there is an assumption that commercial property is not suitable for retail or SMSF investors. Many investors dismiss the potential for including commercial property within their portfolio due to the size of investment required, a potential lack of liquidity and the difficulties of managing it. In truth, a lot of these barriers can be overcome by looking at a pooled investment vehicle, such as listed and unlisted property trusts.
Investing in a property trust means that it’s usually managed by professional property fund managers who have a wealth of experience. Through a trust you can also gain exposure to a diverse range of asset types across a range of locations. Other benefits are the regular valuation cycle, the lower capital requirement to invest, more liquidity through withdrawal facilities and a regular income from a tenancy base that is diversified. Investors also benefit from the performance of the underlying property assets, so you can expect to reap the benefits of their performance. If you choose to add an unlisted property trust to your portfolio you are choosing an investment that is not subject to the volatility of the share market, unlike listed trusts.
The Trilogy Melbourne Office Syndicate Cheltenham is a single asset, unlisted property syndicate with an annual distribution yield of 8.75%1 p.a. paid monthly. The minimum investment is $20,000. Considering cash rates are at historically low levels the yields of property syndicates such as these demonstrate the value they can add to an investment portfolio.
For more information about this investment opportunity visit Trilogy Melbourne Office Syndicate Cheltenham.
1 Forecast are for the periods ending 30 June 2014 and 2015 only. Basis of forecast calculations and key assumptions are detailed in the PDS. Forecasts of future distributions are not a guarantee that they will be achieved and are not indicative of future performance. Actual returns may be negative and you may lose some or all of your investment. There are risks associated with this investment. Those risks are detailed in the PDS.