Professionally managed property trusts, also called property funds or property syndicates, are an alternative way to invest in property without having to outlay large amounts of capital.
Investors buy ‘units’ in an investment property or properties, which are managed by a professional fund manager, like Trilogy.
The initial capital remains invested until the property asset(s) is sold when the trust ends and any net proceeds are distributed among the investors. Throughout the life of the Trust, investors also receive income distributions that are paid at set intervals (e.g. monthly or quarterly).
Investment properties are chosen by the fund manager and bought by the Trust. The fund manager then manages the associated maintenance, administration and rent collection.
The property classification for property funds can range from commercial, retail or industrial and makes portfolio diversification highly accessible for most investors. Property fund managers must provide a Product Disclosure Statement (PDS) with information about the trust, as well as updates about any significant changes to the trust. In the case of unlisted property trusts, the investment manager is also required to publish ongoing disclosure documents.
Listed versus unlisted property trusts
Listed property trusts are listed on the Australian Securities Exchange (ASX), while unlisted property trusts are not. Normally in an unlisted property trust you cannot withdraw your initial capital investment and must wait until the property is sold. The net proceeds are distributed among investors on a pro-rata basis with the return of their capital.
Potential benefits of investing in a property trust
In return for investing in the trust, investors receive distribution income from the property during the life of a trust. However, distributions are not guaranteed, nor is the return of initial capital invested.
You may also receive a ‘capital gain’ on your original investment however, this will only occur if the value of the assets in the trust have increased upon sale. If they have decreased, it results in a capital loss.
Like most investments, there is risk associated with the potential reward and it is critical to ensure the investment risk profile suits your personal circumstances. A licensed financial adviser can help you make this judgement if you are unfamiliar with this investment type.
If you would like to learn more about Trilogy’s Unlisted Property Trusts, check out our current opportunities open for investment or read on to find out the 6 things you need to know about unlisted property trusts.
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 schemes mentioned in this article. This advice is general advice only and does not consider your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances and we recommend that you seek personal financial product advice on your objectives, financial situation or needs and obtain and read the relevant product disclosure statement before making any investment decision.