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In light of recent market volatility, investors looking to diversify their portfolio using assets that have little correlation to stockmarket investments would do well to consider unlisted property.
As the impact of increased difficulty in refinancing and LPT market sentiment starts to bite, we expect some funds to find it more difficult to invest in new assets and in some cases, force the sale of property. As a result funds with cash in the bank, low levels of gearing and those having recently refinanced are a much more attractive investment.
Generally speaking, the Australian property market has changed very little over the last year and continues to provide a good investment opportunity. Despite the difficulties that some companies faced over the last year we aren’t in a property slump, there continues to be strong demand for high quality property.
Cromwell (unlisted) Property Fund
We believe that one of the best ways of diversifying your investments and gaining exposure to property is through the Cromwell Property Fund (CPF), an unlisted fund providing tax deferred monthly distributions.
Managed by Cromwell Property Securities Limited (ABN 11079147809, AFSL 238052), their flagship fund invests in a diversified portfolio of non-residential assets including commercial, industrial and retail properties located throughout Australia. With a total value of $465m, the fund’s heavy weighting of government and blue chip tenants further reduces investment risk by providing a relatively reliable rental income.
To October 2007, Cromwell has a good record of out-performing industry benchmarks with an average annualised return of 18.64%1 across nine other syndicates, outperforming the Mercer Unlisted Property fund index since inception.
| HOW TO APPLY |
Download online: Download a copy of the PDS direct from our website
www.fundsfocus.com.au/latestoffers
By post: You can request to a hard copy of the FEA Agribusiness PDS by calling us on 1300 55 98 69 or using our online request form above. |
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Fees
| Standard initial fee |
up to 4% |
| Initial fee with FF |
NIL |
| Annual Charge (MER) |
0.61%pa2 |
| Bid/Offer spread |
0.50% (approx) |
| Performance fee |
20% of growth in excess of benchmark index |
| Minimum investment |
$10,000 |
Paying a competitive 8 cents per unit (fully tax deferred) and with a unit price currently under $1.00, the CPF is one of the few unlisted property funds that can deliver both a pure property yield and give investors an exposure to relatively low risk value-add opportunities.
We believe that a major demonstration of Cromwell’s strength as a manager is their recent refinancing of the CPF’s debt on extremely favourable terms. With many property funds and businesses struggling to refinance their existing debt facilities, Cromwell’s recent refinancing of their loans at less than 0.1% pa above existing terms for the next 3 years means that unlike many other market players, the fund is unlikely to need to look at selling assets and can focus on adding value to investors.
With little correlation to recent market movements we believe that unlisted property is an ideal way to diversify and add some stability and income to investors’ portfolios. We believe that the Cromwell Property Fund makes an excellent long term choice.
1Page 13, Lonsec Research Report on CPDF (October 2007)
2Current MER disclosed for the 2008 financial year |
