Listed property trusts have been amongst the better performers on the ASX in recent years. With distributions included, the sector has returned 12.9% this calendar year. Over the 3 years to the end of October, the sector has averaged a return of 16.07% per annum. Although there is no franking, distributions from property trusts often include a tax-deferred component, making them partially or wholly tax-free.
An alternative to a listed property trust is an unlisted trust. Typically, these pay higher yields than listed trusts, are either single asset or own a less diversified mix of property assets and are smaller in size. The trade off, of course, is that there is no liquidity, so investors typically agree a timeframe for the fund with the aim of selling the assets and winding up the fund around this time to provide an exit path.
There are several property managers who develop unlisted property funds, including Charter Hall, Centuria and Cromwell. One of the latest unlisted funds is the Centuria 203 Pacific Highway Fund, which opens today for public subscription.