As an asset class, commercial property holds plenty of appeal, but there are compelling reasons to invest via a professionally managed fund rather than as a direct owner.
Commercial property can bring valuable diversification to an investment portfolio, but the benefits go far beyond this.
With long leases that typically span five years, often with options to renew, commercial property can bring certainty of income streams. And, as the lessee typically pays for many of the property’s outgoings including rates, insurance and maintenance, investors can enjoy strong yields and impressive cashflows.
Add in a sought-after location, and commercial property has the potential to generate long term capital growth.
The downside is that individual investors can face challenges in the commercial property market.
Investing directly can involve more risk
Buying a commercial property directly calls for substantial capital, or a significant loan – something not every investor will be comfortable with or be able to qualify for.
The cost involved can see investors restricted to just one property – perhaps a small office, retail or warehouse space, which will likely be let to a single tenant, often a small business. This can see investors pin their hopes of decent returns on one enterprise in one location, which can concentrate rather than spread risk.
If the lessee’s business fails, investors may face lengthy vacancy periods, which can be bruising for personal cashflow.
A property fund overcomes the downsides
One way to enjoy the pluses of commercial property with few of the downsides, is to invest in a property fund.
It’s a step that sees your money pooled with that of likeminded investors, creating a super-sized pool of capital. This allows the fund to invest in multiple properties, providing diversification across locations, types of properties and tenants.
Moreover, by leveraging the greater purchasing power of a property fund, investors gain access to high quality properties – those priced well beyond the reach of most individuals, that will attract blue chip tenants with proven business models.
A property fund also offers the appeal of professional management. A skilled management team will have the experience to select appropriate properties, handle lease negotiations to support long term tenancies and healthy rents, and recognise opportunities to maximise the value of the fund’s asset over time.
More for less
The upshot for investors is that a property fund is a hassle-free way to reap the rewards of commercial property for far less capital outlay than direct ownership.
This advantage is highlighted by the Westbridge Diversified Fund No. 4. The recently launched fund aims to acquire a $100-150 million portfolio of commercial properties diversified by state, asset class and tenants, with the goal of delivering consistent income backed by the potential for capital growth.
Already, Westbridge Diversified Fund No. 4 has settled on one high value asset comprised of two adjoining industrial distribution facilities in Broadmeadows, Victoria. The quality of the site, buildings and location has attracted an impressive tenant, Holman Industries – a key supplier of hose pipe and reticulation products to leading outlets including Bunnings, Tradelink and Reece.
The fund is currently in the process of acquiring a second asset – a recently upgraded warehouse logistics facility in Canning Vale, Western Australia, tenanted by Blackwoods, a wholly owned subsidiary of Wesfarmers, which will further diversify the fund’s portfolio.
The Westbridge Diversified Fund No. 4 also ticks the box for attractive returns. It has a current distribution target of 6.5% p.a.* targets a rise to 7.0% p.a.* as the number of properties expands.
If you’d like to experience the benefits of commercial property with none of the hassle, the Westbridge Diversified Fund No. 4 makes it easy. For more information and to register your interest click here.
*Distributions are not promised nor guaranteed and are based upon a number of assumptions. Their achievement is subject to risks. The target return range is a target only, not a forecast and it might not be achieved. Please refer to the PDS and TMD for more information, noting the section on financial information and risks. Units in this Fund are issued by Mair Property Securities Limited ABN 28091623862. AFS Licence 238386 (Responsible Entity) as a responsible entity of the Westbridge Diversified Fund No.4. Mair Property Funds Limited ACN 151 957 676 t/a Westbridge Asset Management is the investment manager of the Fund (Manager). You can obtain a copy of the PDS, TMD and application form by calling 08 9321 5566, emailing firstname.lastname@example.org or visiting www.westbridgefunds.com.au.