Property & Infrastructure Funds Unlisted Property Trusts

Keen to get any suggestions on locating managers of unlisted property trusts that are asset specific, tending to more conservative gearing and without an egregious fee structure.

Long term lock up no problem, company investor. Intending to add some unlisted stuff to the portfolio and at the size of investment I am looking at the market is distorted by SMSF investors so direct investment not particularly attractive.

@Player @Scott No Mates @The Y-man @bookworm and others any names appreciated and I will work through them.

 

This is one Mgr that Noel Whittaker has mentioned a number of times and from memory invests in himself:

Trusts & Properties Archive | Sentinel

 

This from Whittaker:

“A good example is the Sentinel Property Trust in Brisbane, in which my own SMSF is invested. Their track record is brilliant but they are too small to ever be considered by any of the big institutions.”

 

Cheers mate, I beleive Michael Sherlock (founder brumbies bakehouse) has a large sum invested with Sentinel. I’ve looked at them but my spidey senses suggest a whiff of white shoe and some fairly aggressive leverage....I’ve
seen mention of performance fees being a bit rough as well...but going to look more closely.

 

Watching with interest as dont know much about unlisted property trusts

Unlisted property funds beat the market in 2017

Unlisted property funds were one of the best performing asset classes in the country in 2017, with total returns three times stronger than Australian equities.

The unlisted property funds averaged total returns of 23.4 per cent for the calendar year, according to a Zenith Investment Partners, MSCI and the Property Funds Association report.

That return compares to the 7.7 per cent return delivered by Australian equities.

Maarten Broek, executive director at MSCI, said unlisted property funds also outperformed most other asset classes on a risk-adjusted basis.

Also..

Property Funds Association

Property Funds Association of Australia (formerly ADPIA - Australian Direct Property Investment Association)

 

They are aggressive and it is obvious from their IM's which I've ceased receiving. Also they aren't always a one asset per trust type vehicle. More's the pity as winning acquisitions can sometimes be lumped in with dogs to even out the IRR's. When I undertake due diligence on one asset I expect that is all I will be investing in. I prefer a la carte.

Be wary right now as caps are compressing and we are (probably) near the top of the cycle with interest rates where they are..................not advice; just opinion


Albeit a few years old this thread may help also:

Sentinel Property Group and Sentinel Retail Trust

I will PM you @The Falcon

 

When markets turn getting your cash from a unlisted trust can be a nightmare. Some pre-GFC trusts are still waiting to pay.

Here is a article from 2010 which looks back to the 1990s

The unlisted property funds crisis | Money Management

 

That is one of the big risks with unlisted trusts - a run on cash (redemptions) on an illiquid asset means having to wait for the asset to be sold or for new investors entering the market before you can get cash out.

 

Not quite the same risks @The Y-man

An unlisted PT will require a PDS (if it is meets ASIC requirements for the number of investors).

JVs usually only have a few partners and don't require a PDS (investors may be considered 'sophisticated' (or more aware of the risks). A each participant in a JV has more control than within an unlisted PT. Exiting either are difficult however they both may be onsold to existing investors/JV Partners or a new investor found.

 

Spot on, and there should be an illiquidity premium over A-REITs for this reason.....you need to expect long term lock up on and investment like this and understand the risks involved. I would not invest in a fund that allows regular redemptions.

 

The alternative would be to get into a syndicate - fixed term and usually only a single asset. Still has the difficulty of exiting the investment but may be sold sooner than the full term.

 

Yep, experienced this first hand during the 87 Crash. A couple of our unlisted property trusts froze redemptions for quite a period. Perhaps there’s an illiquidity premium but like property in general I think there’s just too many hassles involved. But that’s just me.

 

But surely if one invests in an illiquid asset like property that they cannot expect to just redeem at will and get the cash without getting a major haircut ? I frankly wouldn’t invest in any vehicle that allowed an investor to do so - where does the cash come from? In most cases investors are protected from redemptions at the worst time (lowest valuation). In my view, You need to commit to the term, be it 5-7 years, and if it has to roll on because of market conditions so be it.

If not and you want indirect prop holdings and you need liquidity you can sell A-REITs at the bottom of the market any trading day. I don’t see illiquidity as an issue in itself.

 

But....thats the key difference between a listed and an unlisted property trust. A listed trust tgat isnt suspended from trading is capable of unit transfer on demand.

 

Blue Sky

 

Yep, thats what I said ;

If not and you want indirect prop holdings and you need liquidity you can sell A-REITs at the bottom of the market any trading day.

 

Good point, for clarity A-REIT = ASX traded security vs unlisted trust.