The listed property trust sector was among the better performing sectors on the ASX last year, with distributions included, returning 14.32%. Over the last 3 years, the sector has averaged a total return of 15.87% pa. And in 2016, despite the overall market’s fall of 7.17%, the sector has only lost 0.81%.
With interest rates likely to stay low and vacancy rates largely stable, the outlook for the commercial property market remains reasonably robust; more so in the stronger east coast markets of Sydney and Melbourne. An alternative to accessing this market through a listed property trust is through 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.