CONTENTS

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Chapter 9

Chapter 10

What you will learn over the next 30 minutes

How the pandemic is creating opportunities in commercial property

Yes, you can afford to invest in commercial property

Residential versus commercial real estate

The five key benefits of commercial property

How to invest in commercial property

Are you the best person to manage your money?

The 8-step guide to evaluating property securities funds and syndicates

WHY CHOOSE APN REAL ESTATE SECURITIES

How to get started

Chapter 1

 

WHAT YOU WILL LEARN OVER THE NEXT 30 MINUTES

Let’s start with a promise. Over the next half an hour you’re going to learn the basics of commercial property investing; not just for the very wealthy but for everyone that wants a hassle-free way to get an attractive, stable yield on their investments.

Before we begin, take a quick look out of the window. If you live in the country and all you can see are fields and trees, well, lucky you. But if like most Australians, you live in a city, you’re probably gazing at rooftops and maybe a few apartment blocks.

Perhaps you’re familiar with how investing in assets like these work. You take out an investment loan and negatively gear your purchase, hoping that the capital growth will offset a meagre rental return and maintenance charges.

But what about those buildings in the distance, the convenience store attached to your local servo and the warehouses that store all the things you buy online?

These are expensive to build and maintain but that doesn’t mean only the very wealthy can profit from them, leaving the rest of us to play on the residential property merry-go-round. What you thought was only available to the very rich is also open to you.

Chapter 2

 

How the pandemic is creating opportunities in commercial property

Before addressing how commercial property investing is accessible to everyone, let’s tackle the elephant in the room – the pandemic and its effect on the sector.

History shows that pandemics have profound effects, accelerating changes already underway and sometimes taking societies in entirely new directions. Covid 19 is no different.

Academics have long predicted that many employees will one day work-from-home. In a matter of weeks, the pandemic turned this prediction into reality. Doubts over the future demand for office space quickly followed. If people were working from home two or three days a week, what would happen to the space they no longer needed and the prices that were charged for it?

Long shadows

As for shopping centres, the shadows hanging over them were evident before the pandemic. They have only lengthened since. With people confined to their homes and shopping centres closed, online retail boomed.

These factors left two of the central tenets of commercial property investing – office and retail properties – bearing cracks. Meanwhile, commercial properties specialising in data warehousing, logistics and telecommunications boomed.

This is a complex investing environment but one laden with opportunity. The widely-held belief that shopping centres and office properties are structurally challenged tarnished the entire sector. And yet the values expressed through private transactions largely held up, as did rent collections, from which regular distributions are paid. The difference between the two is an indication of where the opportunities lie.

There’s one final factor to consider. Whilst interest rates have been declining for decades, they have never been lower. As the pandemic took hold, governments the world over further reduced rates to support economies in shutdown.

Risks and opportunities

It is APN’s view that interest rates are likely to stay at or near historical lows for many years to come. That makes the yield available on many Real Estate Investment Trusts (REITs) look relatively more attractive.

As ever, there are risks but there are also opportunities. This is where the value of a specialised real estate investment manager like APN comes into its own. With 20-plus years of experience, we help investors navigate the complexity of a post-pandemic economy to find attractively priced opportunities delivering reliable, sustainable yield, plus the potential for capital growth.

Chapter 3

 

Yes, you can afford to invest in commercial property

Every Australian of a certain age is familiar with the idea of property investing. It’s been the dinner party topic of choice for decades; buy a place (assuming you can afford the deposit) and negatively gear it on the basis that the capital growth will exceed the rental yields.

Commercial property isn’t like that. The sector’s focus is on delivering an attractive yield from the rent collected, with capital growth second. Whilst the foundation of both residential and commercial real estate is ‘bricks and mortar’, commercial property investing is a very different proposition to residential property.

For starters, you have more choice. In residential real estate investing you can invest in either apartments or houses and that’s pretty much it. In commercial property, your choices cover everything that is not residential, from life science offices, childcare, pubs and mobile phone towers to convenience retail, service stations, retirement living and industrial warehouses.

Commercial property is broadly categorised into four main categories:

1

Retail

Large shopping centres
Shopping strips
Large format retail
Restaurants
Service stations
Convenience stores
Pubs

2

Office

CBD locations
Suburban locations
Life sciences buildings

3

Industrial

Warehouses
Distribution centres
Manufacturing
facilities
Storage

4

Specialised

Mobile phone towers
Data Centres
Childcare centres
Healthcare facilities
Retirement living
Hotels
Leisure parks

Whilst the range of investment choices is attractive, it raises two questions: how can everyday people invest in buildings that can cost tens and sometimes hundreds of millions of dollars and who has the time and expertise to manage them?

You don’t need to be rich to invest in commercial property. REITs allow investors all over the world to access a wide range of commercial property which delivers regular income to investors.

It works like this. When you buy an interest in a REIT, you’re buying a slice of a commercial property portfolio and the dividends and capital growth it delivers.

As for the property management – the capital improvements, rent negotiations, tenant relations, maintenance, accounting and legal compliance – that’s covered by professional managers paid to deal with these headaches so you don’t have to.

In this way, investors receive a regular payment, called a distribution, from their investments in commercial property, without lifting a finger or making a huge capital outlay.

Now you know that you don’t need to be a billionaire to invest in commercial property and can enjoy the benefits of doing so without the hassle, an obvious question arises: if commercial property is so good, why do so many people opt to invest in residential property instead?

Chapter 4

 

Residential versus commercial real estate

In general, commercial property is seen as a defensive, income-focused, low capital growth investment. Residential property, in contrast, is viewed as a more speculative activity.

The table below makes the point. See how commercial property has an effective cash yield that far exceeds that of residential yields?

Then there’s the short term leases in residential compared with commercial, the more volatile returns and legal protections favouring residential tenants. There are risks that residential property investors take that commercial property investors don’t have to.

But it’s the intention behind the investment that’s the biggest difference; because effective cash yields are typically lower, residential property investors are in effect banking on higher capital growth to compensate for a yield that may not beat inflation.

Commercial property, meanwhile, is regarded as a defensive investment due to the predictability of rental income and cash flows, even during volatile economic conditions and pandemics.

Residential versus Commercial: How they compare

1.  As at 31 March 2021. Effective cash yield takes into account deductions such as: agents fees, advertising, repairs and maintenance, vacancy on renewals, insurance, cleaning/damage. Source: APN models, research and external broker reports.

It’s horses for courses, really. If you’re happy to assume that residential property prices will continue to rise and you’re not so worried about yield, fair enough. There are many people making the same choice, in which case commercial property may not be right for you.

But if your focus is on a higher, more stable income from which you can cover day-to-day living expenses, plus a little capital growth on top, commercial property may well be a suitable choice.

Long term performance

Does that mean the benefits of a stable, regular income come at the expense of total returns? Not at all. The chart below shows that between December 1984 and December 2020, commercial property has delivered a total return – income plus capital growth – of approximately 10.1% a year.

Investments can go up and down and past performance is not indicative of future performance but the long term performance of commercial property over the past 35 years should offer investors a degree of confidence at an uncertain time.

Are REITs still defensive?

The question many investors are asking is whether REITs, in a post-pandemic world, are as defensive as they once were.
After the global financial crisis, when the sector suffered huge capital losses and substantial share price falls, income investors wondered whether this fundamentally changed the nature of the sector.

Since then, REIT managers have returned to their knitting, keeping debt low, conservatively managing their investments and focusing more on the sustainability of income rather than capital growth. Rent collections during the pandemic, which generally have been far higher than might have been expected, are testament to this approach.

Of course, CBD offices and particular shopping centres do have structural issues, although management has generally been adept at responding to them. But in the recovery since the pandemic and the valuations sustained in private markets during it, the defensive qualities of the sector remain.

The Covid 19 pandemic was a once-in-a-century event. It’s impact was profound but in time, more investors will come to understand that the key attractions of investing in commercial property remain compelling.

Chapter 5

 

The five key benefits of commercial property

As a potential commercial property investor, it’s useful to appreciate the sector’s five key benefits:

1. Rent is predictable; a business’s profitability is not

Commercial property is regarded as a defensive investment because of the predictability of the rental income and cash flows it delivers.

Think of an ordinary listed investment like a bank or a supermarket. Shareholders in NAB or Woolworths receive a dividend only if the business makes a profit. The level of that dividend depends on the extent of the company’s profit. If times are good, everyone’s a winner. If not, the dividend may be cut or halted altogether. When cash flows are volatile, so too is the income paid to shareholders.

Now think of the rent these companies have to pay for the premises they occupy; the commercial offices, warehouses and retail outlets. These businesses cannot run their operations without them. Crucially, the rent payable to the owners of these properties must be paid regardless of whether NAB or Woolworths is profitable or not.

This is the source of commercial property’s defensive strength and the reason why income from REITs is more reliable than dividends from ordinary listed companies. The experience of the pandemic bears this out. Even in the midst of a once-in-100 year event, the majority of tenants paid rent whilst severely impacted small and medium-sized enterprises were protected, released from their rent obligations by the Government’s leasing code of conduct. While the burden of the policy fell largely on the retail sector and had a significant impact on landlords and investors, rent collection rates will return. The support of landlords, worth several billion dollars to tenants, is a sign of their financial strength and should be applauded.

The REIT sector has survived the pandemic, continued to pay dividends through it and demonstrated its resilience as a result.

2. Long contracted lease terms provide reliable income

In residential markets, lease terms often run for just a year. In commercial property they’re usually contracted over five years and it’s not uncommon for 10, 12 or even 15 year leases. In addition, and in stark contrast to residential property, rents cannot usually fall over the period of the contract.

It’s the rent collected from tenants, secured by long term lease agreements, that delivers the distribution of relatively high, sustainable income to commercial property investors.

3. Regular rental increases provide a defence against inflation

In commercial property there are three ways in which rents can be increased (but not reduced) over the lease period:

  • A rental review can be triggered by movements in the consumer price index, the traditional measure of inflation;
  • Contracts may offer provision for a fixed annual increase in rent, agreed between the landlord and tenant at the time of the lease agreement;
  • A review based on a calculation of ‘current market rent’ agreed between the landlord and tenant (or possibly by a property valuer if a dispute arises).

This is not to say that rents can’t go down at the end of a lease, but these regular reviews can mitigate against inflation and make commercial property an even more defensive investment.

4. An investment with global reach

Australian income investors face many challenges but one few have managed to overcome is an overreliance to Australia.

The 2020 ASX Australian Investor Study revealed that, in the wake of Covid 19, only 7% of retirees and 18% of wealth accumulators intended to invest in directly-held international shares over the following 12 months. The comparable figures for directly-held Australian shares were 50% and 56% respectively. The over-exposure to Australian assets classes looks set to continue.

Commercial property investors have many options to address the issue. According to Nareit, an association for REITs with U.S interests, there are 39 countries that have enacted REIT legislation and hundreds of listed REITs around the world.

For those unwilling to do their own homework, a real estate fund manager like APN offers actively managed funds like the APN AREIT Fund, the APN Asian REIT Fund and the APN Global REIT Income Fund, all of which can be used to build a fully-diversified international and domestic property portfolio.

5. Commercial property investing can be sustainable and profitable

The property sector is a large emitter of carbon, with the buildings we live and work in responsible for half of all global energy use. That places REIT investors, and the property sector as a whole, in a quandary. How can emissions be reduced without it costing the earth and impacting returns?

Surprisingly, there isn’t a trade-off between delivering sustainable buildings and meeting investor objectives. Deutsche Bank’s 2012 report, titled Sustainable Investing: Establishing Long Term Value and Performance, found that high environmental, social and governance (ESG) ratings correlated with a lower cost of capital in every case.

There is a growing body of academic literature that supports the proposition that investing with ESG principles is correlated with higher long term share price performance.

Progressive fund managers like APN Property Group have committed to incorporate sustainable investing into their decision making and assessment criteria.

Chapter 6

 

How to invest in commercial property

Before the advent of REITs, the only way to invest in commercial property was via property syndicates (an illiquid fund) or purchasing commercial property which was an “all or nothing” affair. It was impossible to purchase a part of a shopping centre, warehouse or hospital in a liquid format. Everything was bought and sold in its entirety, which is why to this day many investors think commercial property is beyond their means.

The advent of the listed property trust (REIT) sector in the 1970s changed all that. Now it’s possible to access commercial property indirectly, buying and selling small parcels of real estate much as one would an ordinary share, with minimal upfront capital commitment.

The sector has since expanded further to cover property securities funds and unlisted property trusts, sometimes known as syndicates, each with their own pros and cons.

Let’s look at each in turn:

1. Real estate investment trusts

As explained, REITs are trusts that own, manage and operate income-producing commercial real estate. Listed on stock exchanges like the Australian Securities Exchange (ASX), REITs can be traded just like shares, allowing investors to purchase an interest in a diversified, professionally managed portfolio of real estate in much the same way as you would purchase shares in a portfolio of companies.

There are six major benefits of using REITs to gain access to the commercial property sector:

1. Easy to build a diverse portfolio

REIT sectors include all the options listed in chapter 3, covering thousands of properties; everything from large format retail and life sciences buildings to medical centres and warehouses. You can even access REITs in Asia, Europe and North America, making it easy to build a diverse portfolio of commercial property assets.

2. Simple to buy and sell

Investing in REITs is as easy as trading ordinary shares, and just as cost effective. And because there’s a liquid market for most securities you can usually buy and sell when you want to.

3. Low entry costs

Compared to the large capital commitment required when directly purchasing a commercial property investment, buying REITs requires only a small capital outlay – as little as the minimum parcel of securities required by your broker in fact.

4. High yields

Due to their trust structure, REITs generally pay out a higher percentage of earnings as distributions than ordinary shares. They also tend to offer a more dependable, higher yield than that usually available from residential property.

5. Management expertise

Each REIT is managed by a team of specialist property and investment experts, focused on maximising rental returns and long term capital growth for their investors.

6. Capital growth

Growth is generally consistent with inflation over the medium to long term, adding to REITs’ defensive qualities.

These are the main reasons why you might want to consider REITs as a way of delivering stable, sustainable income to your portfolio through commercial property. They’re easy to access, require little up-front investment and the sector is large enough for you to build a diversified portfolio, either at home or abroad.

As with ordinary shares, REITs can sometimes be relatively cheap and at other periods over-priced. There’s a risk that you might buy and sell at the wrong time.

Then there’s the need for diversification, across the various sectors and geographies. Building a sensible, high-performing portfolio of REITs requires similar skills to building a portfolio of listed shares. You may not have the time or inclination to acquire those skills.

Finally, there’s the risk that every self-directed investor takes; whilst acquiring sophisticated analytical skills is one thing, applying them successfully at a time of high emotion is quite another.

It’s for these reasons that many REIT investors decide to pay other expert professionals to develop and manage a high-performing commercial property portfolio on their behalf.

2. Property securities funds

You may have heard of managed funds, where an investor purchases units in a fund consisting of a portfolio of shares, professionally managed by a team of experts in the field. Properties securities funds are much the same thing, except they specialise in REITs rather than ordinary listed companies.

Real estate securities are managed funds consisting of underlying investments in REITs, which are listed on stock exchanges around the world and unlisted property trusts which aren’t.

Both options allow investors to gain access to high quality, professionally-managed commercial real estate without the need for large amounts of upfront capital. The APN AREIT Fund, APN Global REIT Income Fund and APN Asian REIT Fund are examples of property securities funds that specialise in investing in REITs.

There are five distinct advantages to using property securities funds to develop your commercial property portfolio:

1. Expert management

Whether you invest in a listed or unlisted property securities fund, you are outsourcing the investment decision-making to a team of commercial property experts. It is their job, using detailed valuation processes and meetings with management and site visits to determine which investments to buy, hold and sell in order to generate the best returns for their investors. This leaves you free to get on with your life.

2. Built-in diversification

Because your portfolio is professionally managed, you have exposure across sectors, properties, locations, tenants and even property managers. This level of diversification is greater than many of us might achieve by investing in a single property or REIT ourselves.

3. Easy entry and exit

Unlike directly-held commercial property, units in real estate securities funds are generally quite liquid, although hybrid (a combination of listed and unlisted) property securities funds can be less so. Generally though, unitholders can redeem some or all of their investments within a matter of days.

4. Simple administration

Building a REIT portfolio yourself requires lots of paperwork and administration. Investing through a property securities fund removes that hassle. Although you may own small slices of many different properties, you’ll only receive consolidated statements, making tax time and administration easy.

5. Minimal time and effort

Because a property securities fund is professionally managed, you don’t have to worry about how individual properties in your portfolio are performing. All decision making is taken care of, leaving you free to enjoy the income stream plus the potential capital growth from the underlying properties.

Of course, these benefits come at a cost. As with ordinary managed funds, most property securities funds charge a percentage-based fee of funds under management.

The APN AREIT Fund, for example, charges a total fee of 0.85%. Unlike some other funds, there is no performance fee on top of this fee, which would otherwise detract from total returns.

If a property securities fund doesn’t sound like your thing but you don’t want to establish and manage your own commercial property portfolio, there’s one final option for you to consider.

3. Unlisted property trusts (syndicates)

Unlisted property trusts are similar to property securities funds in that they allow you to access a slice of commercial property or properties with relatively little capital outlay, fully supported by a professional property management team.

The big difference is that when you invest in this structure you are only one step removed from direct ownership. That gives you a higher degree of visibility and financial involvement in the properties themselves.

In many cases you can visit the building(s), monitor the performance of corporate tenants and track performance, delivered via transparent unit pricing and regular valuations. Although the day-to-day building operations and asset management rests with the management team, investors receive a share of the rental income (generally paid monthly or quarterly) and ultimately, the proceeds when the property is sold.

Unlike listed REITs and ASX-listed shares, property syndicate pricing reflects the true value of the underlying assets based on regular independent valuations. But it’s important to note that unlike REITs and many real estate security funds, unlisted property trusts are generally illiquid. That means your funds are locked in for the term of the fund, which are typically five years or more.

Hopefully, at the end of the term, the property would have increased or at least maintained its value; however there is a risk that the value declines leading to potentially significant capital losses. Whilst the manager could choose not to sell the property in this instance and trigger a capital loss, that would result in you not being able to access your funds at the end of the fund term. In this case, the term of the fund may be further extended.

Chapter 7

 

Are you the best person to manage your money?

Only you can answer this question. What we can offer are a few pointers based on experience, plus a little research.

First, building your own commercial property portfolio requires time, skill and psychological commitment. If you think you might fall short on one or more of these requirements, you might want to think twice about managing your own portfolio. The costs of getting it wrong can be very high indeed.

If, on the other hand, you have some investing experience and enjoy the idea of managing your own money, we suggest you start slowly.

Read the annual reports of big AREITs like Scentre Group (the owner of Westfield in Australia) and Stockland and follow APN’s expert sector commentary on our blog at: blog.apngroup.com.au. This will give you a flavour for the issues, management teams, assets and performance measures in the sector.

Also consider portfolio diversity, macro trends, pricing and the long term strategy of each REIT because, if you’re investing for the long term, it’s the decisions that are made today that will affect your investment in years to come.

APN’s seven-strong investment team spend their days down in the weeds of the sector, fine tuning each APN fund’s investment strategy and risk exposure as well as considering major trends which may impact on different parts of the commercial real estate sector.

Please don’t think that you need to follow suit. As long as you’re prepared to accept potentially higher levels of volatility and maybe lower returns, perhaps offset in part by not having to pay a management fee, there’s a chance you can be successful.

For the past two decades, US research house Dalbar has been monitoring the performance of US investors in managed funds (what the Americans call mutual funds). The results aren’t pretty. Investors consistently manage to underperform the benchmark S&P 500 index by as much as 75%. In many cases, they fail to beat inflation.

The reason for poor performance is, according to the report, investors trying to time the market and getting it “badly” wrong. You can try and avoid that fate by having realistic expectations, properly diversifying your portfolio and ensuring your decision making is driven by cold, hard facts rather than emotion. That entails not panicking in the face of volatile market movements. It isn’t easy but it can be done.

Unfortunately, the data suggests most investors fail the challenge. Professionally managed property securities funds and syndicates might offer a better way into commercial property investing. But if you still like the idea of managing your own money, please understand that you’ll need to stay invested through volatile periods to get the returns you want. If we’ve learnt anything from the pandemic, it is this.

Chapter 8

 

The 8-step guide to evaluating property securities funds and syndicates

Whether you’re considering a property securities fund or an unlisted property fund (syndicate) there are some things you need to cover before making your decision:

1. What are you buying?

Buried in this simple question are a host of more complex considerations, including:

  • What will your fund invest in and what will its investment strategy be?
  • If it is a property securities fund, how will it be managed?
  • Are you looking for local or international exposure, or a mix of both?
  • Will it replicate an index or seek higher regular income?
  • If the fund is to acquire direct property, where is it located, what sort of property is it and is the price reasonable?
  • Are forecast returns appropriate for the risk associated with the investment?
  • What is the amount and frequency of distributions?
  • How ethical and sustainable are the assets in which you’ll invest?

2. Who is managing your money?

Experienced, professional management is critical to selecting and managing assets that offer the greatest opportunity for superior returns.

Decisions about buying and selling property, retaining and attracting the right tenant mix, negotiations around extending lease periods, enhancing rental income, reducing outgoings and managing capital expenditures are critical management skills that have a direct bearing on future returns.

With syndicates, ensure that you’re happy with the managers of the project in these areas of competence. With property securities funds, reassure yourself that the people managing your money are paying due care and attention to the management teams at the REITs in which they invest.

Look for highly credentialed managers with a proven track record of successfully managing property investments over a long period, and through different market cycles. Make sure that the company or people you are choosing to manage your money are trustworthy, communicating their decisions with clear language and openness.

3. Is the fund carrying too much debt?

The use of debt in finance is commonly used to assist with the purchase of assets and can be important in establishing the optimal property fund structure. Debt isn’t necessarily bad but too much of it can be.

The extent to which a fund’s assets are financed by debt is reflected in its gearing ratio. A higher gearing ratio means a greater reliance on debt, which in turn increases the risk of the fund. Review gearing ratios at both the asset and fund level. As a general rule, gearing ratios higher than 50% should be treated with caution.

4. Is the fund rated by independent research?

Look for property investments that have been positively rated by independent rating houses. Research houses conduct in-depth analysis of the investments, including detailed assessments of management’s capability, risks and suitability of the asset for the purpose intended. The APN AREIT Fund, for example, is rated by SQM Research, Zenith and Lonsec.

5. Are you locked in?

Generally, property syndicates are an illiquid investment. You invest money for a fixed period, with few real options to redeem your funds until the property(ies) are sold. Be prepared to have your money tied up for the life of the fund.

Property securities funds that invest in listed property, on the other hand, may be more liquid and offer full, partial or limited windows to redeem funds. Before investing, be careful to understand whether and when you can withdraw from the investment, and how long it might take for the return of your funds.

6. What are the fees?

Ongoing management expenses for property securities funds can range in value but there may also be indirect fees and costs charged at the underlying REIT level. For property syndicates, the costs can be higher. In addition to ongoing management expenses, one-off acquisition and disposal fees typically range from 1-3%, covering the cost of property identification, equity raisings and sales management.

The manager may also be entitled to a performance fee upon termination if the returns of the fund exceed a set level. These fees are in addition to the on-going management expense and a range between 10% and 20% of the outperformance is considered acceptable.

Understanding the fees and costs associated with your investment, be it in a syndicate or property securities fund, is critical. Make sure you feel comfortable that they’re appropriate and that the interests of the manager are aligned with those of the investor. Remember that the higher the overall fee, the lower the returns investors will receive.

7. Have you read the Product Disclosure Statement (PDS)?

Ensure you carefully review the PDS in full before making any investment. Without doing so you may not be making an informed decision. Concentrate on those sections that explain the key features, fees and costs, and risks of the investment.

8. additional risks specific to property syndicates

A key driver of returns is the leasing profile of the property in question. Because syndicates invest in specific properties, the considerations are slightly different. The weighted average lease expiry (WALE), the vacancy rate and the quality of the tenants, in terms of their financial strength and employee growth profile are all important factors to carefully consider.

For example, how committed are the tenants to the building? Have they invested heavily in fit-outs and do they place significant importance on office location as part of their corporate branding or employee culture? Are rents fixed, linked to CPI or at market rates? These are the kinds of questions you should have answers to before investing as part of a syndicate.

Confusing net asset values (NAV) with entry prices is another pitfall. Because syndicate investors are paying for specialised management, maintenance and operations, these costs are embedded in the syndicate entry price. In contrast, NAV relates only to the property’s valuation. This generally explains the difference between the two figures. If a syndicate’s entry price is, say, $1 per unit, the net asset value is typically somewhere around 85-95 cents.

Another issue concerns the exit strategy. The sale of the asset and return of funds to unitholders should be addressed in the disclosure document, detailing the explicit circumstances that must prevail in order for the life of the fund to be extended. For example, is the unitholder vote unanimous or majority driven? Or is there an automatic right of the Responsible Entity to extend the fund for a further period of time?

For these reasons, investors in syndicates tend to be more sophisticated and experienced. That’s why most investors starting out on the journey of building a commercial property portfolio don’t want to manage their own money, preferring to invest instead in listed property securities funds.

Chapter 9

 

WHY CHOOSE APN REAL ESTATE SECURITIES

Focusing exclusively on property since 1996, provides us with a depth of understanding which enables us to deliver superior investment returns for hundreds of thousands of investors.

Our deep understanding of real estate and “property for income” philosophy, together with a highly disciplined investment approach has been the backbone of our performance.

Over the years, our investment performance has been recognised by many industry awards and independent ratings from leading research houses.

APN REAL ESTATE SECURITIES Funds

 

1. Underlying securities are conditionally valued and re-weighted, independently of index weightings.
2. The APN AREIT Fund aims to provide than lower market volatility compared with the S&P/ASX 300 AREIT Index. The APN Asian REIT Fund aims to provide lower than market volatility compared with the GPR APREA Composite REIT Asia Index (in AUD) (GPR). The APN Global REIT Income Fund aims to provide than lower market volatility compared with the GPR 250 REIT Index (or equivalent Global REITs Index).

Chapter 10

 

How to get started

If you’ve chosen to develop your REIT property portfolio yourself and know what REITs you want to buy, placing an order is exactly the same as it is for ordinary listed shares. As long as you know the relevant ASX code you’re on your way.

But what if you don’t want to manage your own money and instead prefer to pay a property securities fund do it for you? Once you’ve settled on the fund(s) you want to invest in you have two options.

Option 1:

Complete an application form and call APN Investor Services on 1800 996 456 for help

This option is paperwork heavy but there’s always help available if you get stuck. Property securities funds want to make it as easy and painless as possible to invest with them, which is why most have investor services teams to help you out.

The first step is to download the product disclosure statement and begin filling out the application form, paying special attention to the supporting documentation that you need to supply. Again, if you’re interested in any of APN’s funds you’ll find all the information on our website at www.apnres. com.au.

If you’d rather save time by completing an application online than filling out a hard copy, use APN’s dedicated online application.

Option 2:

Use the ASX mFund Settlement Service

Assuming the fund you’re interested in participates, using the mFund Settlement Service you can purchase units just as you would direct shares.

The mFund service uses CHESS, the ASX electronic settlement system. This means your mFund holdings are electronically linked to the same Holder Identification Number (HIN) used to hold your ASX-listed investments. (If you do not currently hold a HIN, you will be issued one if you acquire units in a participating managed fund.)

This allows you to track your managed fund investments alongside your shares and other securities – providing greater transparency over your holdings and making it possible to view everything you need in one place.

Best of all, if your existing broker supports mFund, you don’t need an application form, trust or super fund documentation, nor identity checks. As long as your broker supports the platform and you know the mFund issuer codes, it’s really very simple. Visit www.asx.com.au/mfund to find out more about mFund and to see if your current broker supports mFund.

Option 3:

Get in touch with your adviser

Having served income investors for over two decades, APN Real Estate Securities is well-known among and respected by financial advisers. There’s every chance your financial adviser can help you with your application if you’d rather they take care of it. Just give them a call or drop them an email telling them the fund you’re interested in and the amount you’d like to invest and they should be able to take it from there.

Where to find out more

  Visit www.apnres.com.au
  Visit our blog to read the latest insights on the market
  For a glossary of terms, visit APN Propertypedia
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This summary has been prepared by APN Funds Management Limited (APNFM) (ACN 080 674 479, AFSL No. 237500) for general information purposes only and whilst every care has been taken in relation to its accuracy, no warranty is given or implied as to the fairness, accuracy or completeness or correctness of the information. APNFM is a wholly owned subsidiary of APN Property Group (ASX:APD) comprising APN Property Group Limited (ACN 109 846 068) and APN RE Limited (ACN 627 612 202, AFSL No. 510685) as responsible entity for APD Trust (ARSN 629 330 007). APNFM is the responsible entity and issuer of the APN Property Group products. Information contained in this book is current as at April 2021. The information provided in this material does not constitute financial product advice and does not purport to contain all relevant information necessary for making an investment decision. It is provided on the basis that the recipient will be responsible for making their own assessment of financial needs and will seek further independent advice about the investments as is considered appropriate. Past performance is not necessarily an indication of future performance. Returns shown are for retail investors, net of fees and costs and are annualised for periods greater than one year. Returns and values may rise and fall from one period to another. Investors’ tax rates are not taken into account when calculating returns. General risks apply to an investment in APNFM’s funds and must be considered before making an investment. In deciding whether to invest or continue to hold an investment in a particular fund, a person should read the relevant Product Disclosure Statement (PDS) for the fund in its entirety. APNFM recommends that a person obtain financial, legal and taxation advice before making any financial investment decision. Allotments or issues of securities will be made only on receipt of an application form attached to a copy of the relevant PDS. A copy of the PDS is available from APN Funds Management Limited, Level 30, 101 Collins Street, Melbourne, Victoria 3000 or by visiting www.apngroup.com.au.