What is an unlisted property trust?

See all articlesBP service station
Unlisted property trusts
July 1, 2020
minute read

Find out how you can benefit from investing

Unlisted property trusts offer a unique investment opportunity with several highly desirable features.

At Fawkner property, we create unlisted property trusts with the goal of providing reliable monthly income and long-term capital stability for our investors.

Keep reading below to learn more about unlisted property trusts or see our current investment opportunities.

Unlisted property trusts explained

The main features of an unlisted property trust are:

  • A syndicate of investors who pool their resources to purchase commercial property
  • A fixed investment term, usually around 6 or 7 years
  • Regular income from tenant rental payments

The purpose of an unlisted property trust is to bring together like-minded investors to purchase commercial property which would be beyond the reach of an individual investor.

Unlike other types of investments, unlisted property trusts are designed to provide regular income and long-term capital stability. This means unlisted property trusts are an excellent diversification strategy for investors who already have share investments.

Investment income is achieved by taking advantage of low interest rates through positive gearing, as well as potential for capital gain as rents grow.

Listed vs unlisted property trusts

Listed property trusts are also known as ‘real estate investment trusts’ or REIT. As the name suggests, the main difference between listed and unlisted property trusts is that listed trusts are listed on the ASX while unlisted property trusts are not.

In practice this means that you can buy or sell units in an REIT at any time while unlisted property trusts have a fixed term, at the end of which investors are offered the chance to sell their investment. While the flexibility of REITs may be appealing to some investors, this also means that prices are more volatile than unlisted property trusts. Here are the differences at a glance:

Unlisted property trusts

  • Fixed investment term
  • Greater capital stability
  • Similar to direct property ownership

Listed property trusts or REITs

  • Buy or sell at any time
  • Greater price volatility
  • Similar to share investments

Who can benefit from unlisted property trust investment

Because they provide reliable investment income, unlisted property trusts offer a great diversification strategy if you already have investments which rely on capital growth to give you a return, such as shares or residential property.

With that said, an unlisted property trust is a great option for all types of investors as it gives you access to highly desirable commercial property investment without the cost of purchasing commercial property on your own.

Anyone looking for an investment with the following features can benefit from investing in an unlisted property trust:

  • Regular and reliable investment income
  • Long-term capital stability
  • Fixed investment terms
  • Low risk to capital investment

Other investment options

If you’re considering investing in an unlisted property trust, you will likely also be considering all your other investment options. Here are some similar investment types and how they compare to unlisted property trusts:

1. Managed mortgage schemes

A managed mortgage scheme is an investment in mortgage loans or companies which lend for mortgages. While managed mortgage schemes can provide substantial income, they provide no capital growth.

2. Bank term deposits

A bank term deposit will give you a fixed interest on the amount you deposit for a fixed period of time. Bank term deposits provide no capital growth, even to keep up with inflation, and the interest rate you receive tends to be very low.

3. Corporate bonds and government bonds

Investing in corporate bonds essentially means you are loaning money to the company without receiving an ownership stake as you would with shares. This provides low income and can provide capital gains, but only if interest rates fall.

Government bonds are similar to corporate bonds except that the recipient is the government. These are secure, but provide no capital growth and not much interest.

Trust Fawkner Property for unlisted property trusts

At Fawkner Property, we create and manage unlisted property trusts with a focus on essential services. Our tenants are large, financially strong national brands with long leases, providing reliable rental income and resistance to economic downturns.

We design our trusts to ensure reliable monthly income, capital stability, and compliance for our investors. We have comprehensive due diligence processes and compliance procedures to ensure property investments always meet the highest standards. All of our trusts include:

  • Regular investment income paid monthly
  • Diverse tenants in different industries and locations
  • Weighted average lease expiry (WALE) of more than 12 years
  • Direct management of investment properties, ensuring close relationships with tenants

Related articles