Nov 19 2018Add to Favorites
Off the back of successfully settling a $48m syndicated first mortgage for a residential apartment development in Sans Souci just weeks ago, Sydney-based real estate investment manager Centennial Property Group (CPG) opened a new fund with a focus on the industrial and logistics market, Centennial Industrial and Logistics Fund II (CIL II). The fund, available only to wholesale and private high net worth investors, opened on 1 November and was seeking to raise c. $38 million. CPG closed the fund less than two weeks later, well before the official close date, due to oversubscription.
“The industrial fund will hold four high-quality industrial warehouse assets and is targeting an internal rate of return (IRR) of 12.2%, with annual distributions forecast at 6.5% and made to investors quarterly,” says Kim Kitchen, Director of Distribution and Marketing at CPG.
“We have been finding a number of our regular family office and self-managed superannuation investors have been attracted to the offering as a result of the strong underlying asset base, together with the good yield and prospect for growth.”
Australian self-managed superannuation funds (SMSFs) have an estimated 19% of their c.$700b value invested in real estate. With major banks such as Westpac and CBA announcing that loans to SMSF’s will no longer be provided to buy property, syndicated investment via a fund is an attractive alternative solution to achieve property investment exposure.
“Over recent years we have needed to close investment rounds early on a number of occasions, often prior to promotion outside our existing client base, due to oversubscription. This is an indication of the attractiveness of this investment structure to high net worth investors and we believe also testimony to the quality and success of our investment style and management.”
“With this fund in particular, we are finding the predictability of income has been very attractive to investors, particularly those funding income streams within their SMSFs,” says Ms Kitchen. “We are now actively seeking further assets in this industry to potentially create an additional fund given market demand.”
CIL II is a five to seven-year industrial fund which will initially target four high-quality industrial assets in Victoria with a total combined purchase price of $60.45m. The fund will be geared to approximately 50% LVR. The subject properties are 92% occupied and the aim of the fund is to drive income and increase the yield, using various value-add strategies to maximise the exit value for investors.
Centennial Property Group has completed more than $1 billion of transactions and produced an average internal rate of return across the portfolio of over 25%.
Qualitas' first "pure property debt" listed investment trust, the Qualitas Real Estate Income has raised another $35 million in funds to issue more commercial loans.
Commercial property isn’t a pure income asset class like cash or fixed interest but it has a few advantages over other forms of income-based investing, starting with the yield. Right now, the APN AREIT Fund, for example, offers a distribution yield of 6.08%, paid monthly.
The Centennial Industrial and Logistics (CIL) launches its latest Enhanced Value fund will follow on from the success of the CIL I and CIL II funds which currently own 6 industrial and logistics properties across Brisbane and Melbourne totalling around $90 million in value.
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