Wholesale Commercial Property Syndication

Direct commercial property has historically offered investors a combination of income and long-term capital growth that is difficult to replicate through listed markets alone. It also demands scale. Quality commercial assets — well-located, well-tenanted, on long leases — are generally beyond the reach of individual investors acting alone.

Syndication addresses that. By pooling capital from a limited number of wholesale investors, a syndicate can acquire assets of a quality and scale otherwise inaccessible, with the acquisition, management and eventual disposal handled by an experienced manager.

How we approach property syndication

Access

Most wealth management firms offer property exposure through listed vehicles or retail funds. Our clients are provided with preferential access to unlisted property trusts offered to wholesale investors — opportunities that are not generally available through public markets.

Assessment

We assess each opportunity on the fundamentals: the quality and location of the asset, the strength and duration of the tenancy profile, the capital structure and gearing, the track record of the manager, and the terms on which investors enter and exit. Not every opportunity presented to us is one we recommend.

Portfolio context

Property is one component of a diversified portfolio, not a portfolio in itself. We consider the appropriate weighting to direct property alongside a client's other holdings, their liquidity requirements, and their broader objectives. Unlisted property is by nature illiquid, and that characteristic needs to suit the investor rather than the other way around.

What investors should understand

Unlisted property investments differ from listed securities in ways that matter:

• Liquidity — capital is generally committed for the term of the trust, which may be several years. There is no daily market in which to sell.

• Valuation — assets are independently valued periodically rather than priced continuously.

• Gearing — most syndicates employ debt, which amplifies both returns and risk.

• Concentration — a syndicate typically holds one asset or a small number of assets.

These are characteristics rather than flaws, and for the right investor with the right time horizon they are part of what makes the asset class attractive. But they need to be understood before capital is committed, and we discuss them plainly with clients.

Who we advise

Wholesale property syndicates are available only to wholesale and sophisticated investors as defined in the Corporations Act 2001. Our clients in this asset class are typically families, business owners and self-managed superannuation funds with substantial portfolios and the capacity to commit capital for the term of an investment.