Commercial property via a fund paying monthly income

Co-founder of the Switzer Report
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Very few of us have access to the millions of dollars needed to directly acquire commercial property. So as private investors, we usually approach this by investing indirectly through a managed fund where the monies of the many are pooled.

The two most common structures are listed property trusts (also called A-REITs or Australian Real Estate Investment Trusts) and unlisted property funds. Listed property trusts are typically multi-asset, more diversified, can be multi-sector (e.g. office or retail or industrial), larger and relatively liquid. The liquidity comes from being listed on the ASX with a diversified investor base.

Record low interest rates have fuelled the demand for A-REITS, resulting in the sector recording a return of 23.9% for the eight months to the end of August. This has also resulted in A-REIT yields compressing to 3.5% to 5.5% pa.

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