With retail facing headwinds and heavy inflows of capital compressing yields in commercial real estate, the industrial sector currently offers some of the most attractive investment opportunities in the Australian property market.
That’s why we believe the timing is right to expand the Trilogy Industrial Property Trust. The Trust holds three properties and is now acquiring three more, giving new and existing investors the opportunity to participate.
We sat down with Trilogy’s Head of Property Assets, David Hogan to discuss our latest investment opportunity.
“In Australia and around the world we’re seeing massive capital flows looking for investment but there is only a finite amount of opportunities available,’’ says David. “And demand for industrial property is particularly high. It probably exceeds that for office space and certainly that for retail.’’
Industrial property typically features long leases with fixed rental increases that provide a relatively high level of income certainty, and the Trust is designed to appeal to those investing in property with a long-term view, seeking stable and regular income and the potential for capital growth, with lower volatility than equity markets.
The open-ended Trust seeks assets that offer an opportunity of value-add. David says this investment approach is quite different from those of the larger players in the REIT sector of the Australian property.
“We don’t seek to compete with them, we’re in a niche quite separate to that and it’s one we know very well.’’
Trilogy’s niche is smaller properties across the commercial, industrial, retail and residential sectors of the eastern seaboard managing funds on behalf of thousands of investors.
The Trust’s portfolio is currently valued at $29,050,000 and it’s now raising equity of $19,856,433 to combine with debt and acquire three new properties valued at $24,840,000. The Trust will maintain its target gearing ratio of below 50%.
David says the Trust is focused on investing in property in capital cities and major regional centres.
“Currently we have two assets in Mackay and one in Adelaide,’’ says David. “We’re now in the process of closing transactions which will add another two in Mackay and one on the Gold Coast, and we aim to settle these acquisitions just prior to Christmas.’’
The Trust looks for regions with strong population growth, but also servicing hig-performing industries. Mackay, for instance, supports the coal industry and other mining interests in Bowen Basin as well as the pastoral sector and has a strong government presence too.
“We’re investing in a property in Mackay with Komatsu as the tenant – one of the world’s largest producers of earthmoving equipment,’’ says Hogan.
“As an open-ended fund we can add and subtract assets to maximise value for investors, and we look for opportunities that may provide value-add potential. With one of the Mackay assets we virtually doubled warehousing space and wrote a new 12-year lease off the back of that, expecting these initiatives to add value to this asset.’’
“We take the time to analyse and understand each tenant’s business, and ensure we are comfortable with it,’’ he says.
The Trilogy team believe the Trust is a compelling opportunity for investors in the Australian property market seeking strong returns in a low-rate investment environment.
The Trust has a forecast distribution rate of 8.00%p.a. net of fees from settlement in December 2019 to June 2020.
Given previous interest, the Trilogy Industrial Property Trust is only expected to be open for investment for a limited time. We recommend investors act quickly to secure their allocation of units in the Trust.
Find out more about the Trilogy Industrial Property Trust and how you could gain access to an investment in one of the most sought after property asset classes.
*Forecast distribution rate (net of fees, costs, and less tax) for the period from the expected settlement date in December 2019 to June 2020. Forecast returns are not guaranteed and are based on the future property portfolio and assumptions which are detailed in the PDS.
This article has been prepared by Trilogy Funds Management Limited (Trilogy) ABN 59 080 383 679 AFSL 261425 as responsible entity for the managed investment scheme mentioned in this article. Trilogy has issued a Product Disclosure Statement (PDS) for Trilogy Industrial Property Trust (Trust) ARSN 623 096 944 dated 31 October 2019. The PDS is available at www.trilogyfunds.com.au/industrial or by contacting us. You should obtain a copy of the relevant PDS, understand the risks, and seek personal advice from a licensed Financial Adviser before investing. Investment in the Trust is subject to terms and conditions, and risks which are disclosed in the PDS. These risks include the risk of losing income or principal invested. Applications will only be accepted on the current application form that accompanies the PDS. These managed investment schemes are not bank deposits and Trilogy does not guarantee their performance.
The information on this website contains general information and does not take into account your personal objectives, financial situation or needs. Trilogy is only licensed to provide general financial product advice on its own products and does not consider your objectives, financial situation or needs when providing any information or advice.