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Stronghold Investor Market Update: What you need to know about wholesale property trusts as an alternative to shares and residential property investment.
Uncertainty driving investor interest in wholesale property trusts
26 February 2019
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1 minute read
Based on our feedback, Labor’s proposals to remove franking credits and negative gearing has a lot of investors worried. As a result we’ve seen a noticeable increase in enquiries from wholesale investors looking for alternatives to shares and residential property investment.
In our view, returns from the wholesale unlisted property trust sector are less likely to be affected by the proposed changes because;
- Commercial property trusts are positively geared
- Trusts are generally ‘flow through’ investment vehicles
It’s a growing sector but as with any investment, it has pros and cons. At Stronghold Investment Services we have developed a successful model which has been delivering returns to investors since 2013.
The main features of our property trusts include:
- Generally a single asset which is held for fixed term
- Potential for capital growth and rental growth over the medium to long term
- High quality, life-cycle assets that we expect will continue to perform throughout the investment horizon
- Our management fees are correlated to the investment – we charge against a share of distributions paid - not against income or asset value.
Please note returns are not guaranteed.
Since establishment we have been able to deliver consistent results to investors. Stronghold alone and jointly manages in excess of $200 million in quality assets in Queensland, Victoria and New South Wales.
Recently we have seen an increase in inquiry, and our last offer, a Hospitality Trust in Bundaberg, was over-subscribed in less than three weeks.
We’ve also seen strong enquiry for our latest offering, which is a property located in the Melbourne Metropolitan growth corridor of Pakenham.
The Stronghold Hospitality Trust No 15, which will purchase The Cardinia Club on Racecourse Road, Pakenham on the basis of a 13.3 year lease to the Pakenham Racing Club, was opened for subscription on 15th February.
We are seeking to raise $8,750,000 in equity to purchase this established entertainment venue in a strong growth corridor, with a long-term lease to a highly credentialed tenant
The trust has a projected average annual return of 7.25% over the first three years and there are opportunities to improve that return with additional land available for future development (subject to council approval).
For more information about Stronghold Investment Services and to register for a copy of the Information Memorandum for Hospitality Trust No 15, please visit www.strongholdinvest.com.au
