Commercial Property Syndicate – An Alternative Way to Invest
Tom Borsky of Peak Equities explains what a commercial property syndicate is, and why it is a more secure and less demanding form of property investment.
In today’s competitive property market, with prime commercial assets priced out of the reach of many investors, participation in a commercial property syndicate has presented as an increasingly popular mode of investment. Syndicated investment is essentially passive in nature. The responsibility for identifying and negotiating the purchase of suitable properties rests with the syndicate manager, who undertakes an exhaustive “due diligence” investigation of the assets prior to committing to a purchase.
The syndicate manager also arranges for any bank financing and negotiates the terms of the purchase contract and any relevant leases. Property syndicates are commonly structured as unit trusts, with individual investors being allotted units in the proportion that their investment bears to the total subscribed capital of the trust.
Peak Equities Pty Ltd has emerged as a significant participant in the property trust industry. Established some six years ago by father-and-son team Tom and David Borsky, the company currently administers commercial properties valued at more than $220 million.
Investors receive monthly cash distributions ranging from 8.0 per cent to 10.4 per cent per annum. Managing director Tom Borsky contends that the unlisted syndi- cate market offers more realistic asset values and greater stability of both income and capital than the publicly listed real estate invest- ment trusts. The REITs, as they are known, are far more volatile with the value of equity more closely reflective of the overall share market than the fair value of the underlying real estate assets.
Investment in Peak Equities syndicates is open to “wholesale” or “sophisticated” investors as defined in the corporations law. Intending investors are provided with an information memorandum setting out full details of each proposed property acquisition before applying to participate in a particular syndicate.
Borsky highlighted the following benefits of investment in commercial property syndication:
Security through diversification
Investing a smaller sum in one or more syndicates provides investors with the opportunity for greater diversification in comparison to investment in a single asset. Investment risk is further reduced by the syndicate manager’s thorough due diligence process prior to committing to the purchase of each asset.
Quality of assets
Investors can participate in the ownership of premium “A-grade” commercial assets that may otherwise be out of the reach of an individual investor. Investment parcels usually range from $200,000 to $1 million.
High income yields
Investors of commercial property syndicates receive high income yields with monthly income distributions – commonly 8 per cent p.a. or better, resulting from the syndicate manager’s expertise in asset selection and management.
It is also common for a significant percentage of the trust income to be “tax-advantaged”, and in most instances, the yield is further improved through relative land tax advantages (intend- ing investors should consult their professional adviser or speak with the fund manager for a detailed explanation).
Opportunity for capital growth
Reflecting the syndicate manager’s expertise in selecting and managing the property and the tenants to maximum benefit.
Set and forget
Every aspect of the management of your investment is the responsibility of the Fund Manager. Individual investors need not be concerned about vacancies, repairs, capital expenditure, rental collections or new lease negotiations.
About Peak Equities
Peak Equities Pty Ltd is an experienced and proven commercial property syndicator, with a proud track record of delivering strong financial returns and security for their clients. The company source high yielding, well-located and well-tenanted commercial and industrial investment properties with sound growth potential.
The team at Peak Equities engages closely with their investors to ensure that their individual needs and expectations are satisfied throughout the investment term. From the moment of acquisition, the team’s interests are completely aligned with those of their clients.
Peak Equities administers commercial properties across Australia, with an impressive portfolio that spans across Victoria, NSW, Queensland, South Australia and Tasmania.