The listed property trust sector continues to be one of the best performing sectors on the ASX. Prior to last Friday’s volatility, the sector had returned 14.48% this year. Over the three years to the end of May, it has returned 16.80% pa (distribution plus capital growth), which compares to the broader market’s 7.71% pa. Forward distribution yields on some of the major listed trusts such as Scentre, GPT or Dexus, somewhat remarkably, now start with a big figure of “4”. The search for yield has never been more intense.
An alternate to investing in listed property trusts 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.
There are several property managers who develop unlisted property funds, including Charter Hall, Centuria and Stockland. One of the latest unlisted funds is the Centuria Zenith Fund.