Alternative Ways to Invest in Commercial Real Estate
Introducing Luke Borg of REAL Property Funds
It’s my pleasure to introduce Luke Borg, my guest post.
Luke and his team have created a wonderful resource for those who want to invest in property outside the usual residential housing. Here you will find all the information you need to invest in commercial real estate. Thank you Luke for the most informative article, I am sure my readers will enjoy it.
Alternative ways to invest in Commercial Real Estate
While investing in commercial real estate directly may be beyond the affordability of most people, there are numerous other ways for everyday investors to get access to this strong asset class.
At REAL Property Funds we want to connect investors with investment opportunities in the commercial real estate space and to do this we have created a platform that will enable investors to easily seek out and find property funds that meet their investment appetite.
Coming from the property development and property investment space our team found searching for and investing in property funds challenging and time-consuming. With REAL Property Funds acting as an aggregator of unlisted property funds we hope to make this process easier for investors.
Our team at REAL Property Funds has identified the following alternative ways to invest in commercial real estate outside of direct investment.
A private syndicate is when a group of investors get together and pool their money to buy a property or group of properties.
This type of investment generally requires a substantial level of investment by each investor and may or may not include borrowed funds. Exit out of this investment is usually by way of selling the property or group of properties.
Professionally Managed Property Trust (Fund)
A professionally managed property trust is when an investor makes property investment through a professionally managed investment product (also known as a property fund). Within Australia, there are two major types of these investment products: ASX real estate investment trusts (A-REITs) and property funds. Within Australia, both of these products are regulated by the Australian Securities and Investments Commission (ASIC).
Benefits investors can gain from professionally managed property trusts are:
- Investors can access assets they couldn’t otherwise purchase individually, such as large office buildings or major shopping centres;
- Investors can share in the capital growth from these assets; and
- Investors can gain a regular income stream through regular distributions (sometimes monthly).
ASX-listed Real Estate Investment Trusts (A-REITs)
ASX-listed property trusts (also known as listed property trusts) are listed on the Australian stock exchange (ASX) and can be traded just like any other share. There are a wide variety of A-REITs available and they cover a wide variety of asset classes, including commercial property.
Whilst each A-REIT generally offers exposure to a number of properties in one investment, these properties can change over time as the manager looks to improve the portfolio.
Due to ASX-listed property trusts being listed on the Australian stock exchange they can experience price volatility like any other share.
Property funds provide an investment with characteristics not too dissimilar to direct property purchase of a commercial property or a private syndicate, with the added benefit of professional management.
Property funds are generally priced based on the underlying valuation of the property asset and experience lower price volatility than A-REITs.
Luke Borg of REAL Property Funds
Disclaimer: Financial Mappers does not have an Australian Financial Services License, does not offer financial planning advice and does not recommend financial products.