What are unlisted property funds?
Unlisted property funds can be categorised into two different structures:
- Closed ended: In a closed-ended structure, investors will receive units at the commencement of the fund and generally cannot redeem until the underlying property is sold, proceeds are distributed and the fund is wound up. These are typically single asset funds and run for a fixed-term of 5-7 years. Centuria has a number of closed ended unlisted property funds that are typically single asset funds that invest in high value commercial property across Australia.
- Open ended: In an open-ended structure, the property fund can continue to issue units and acquire new properties on an ongoing basis. The fund has a diversified portfolio of properties where there is no fixed-term of investment, meaning the fund remains open with no definite end date. Instead, investors are offered a liquidity facility where they can redeem part or all of their units in the fund at regular or certain times during the life of the fund. Centuria has three open ended unlisted property funds, the Centuria Diversified Property Fund (CDPF), the Centuria Healthcare Property Fund (CHPF) and the Centuria Agriculture Fund (CAF).
Benefits and risks of unlisted property funds
Unlisted property funds have the potential to provide investors with returns in the form of capital gains and regular distribution (rental) income. They also enable investors to gain exposure to the commercial property market at a relatively low entry point without the requirement to manage the properties themselves. The key things to consider when investing in unlisted property funds are the liquidity of the fund, the gearing of the properties in the fund and understanding the individual properties held by the fund and their characteristics. You should also consider whether this general information is appropriate for you and consult your financial or other professional adviser before investing. For further independent information, please read the MoneySmart guide to investing in property schemes.
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