SMSF investors looking to offset low returns from cash investments should consider non-residential property investments to boost income, according to a specialist real estate investment manager.
Freehold Investment Management managing director Grant Atchison said while residential property was popular with SMSFs, trustees could make use of non-residential property funds to top up their portfolios and provide income during the current low interest rate environment.
“The opportunities for income have diminished with equities, fixed income and term deposits, and there are still other options out there, but from a risk perspective, what are people willing to pay for those options?” Atchison said.
“In our experience, most people are familiar with non-residential property that they cannot own themselves, such as office space, but there are more opportunities out there than they can see as an individual investor.
“The property universe is broad and includes things people are familiar with, such as child care, aged care, hotels and industrial sites such as warehouses, which they can’t access for themselves. But that is where our conversations are focused and we can provide access to the best of these property investments.”
He said Freehold differed from other property managers in that it did not develop property or manage property assets, but invested only in tangible assets valued at between $10 million and $30 million that created an income stream.
“We did this as a way of answering the question of how to create a stable income stream from property investments and we have a large cohort of SMSFs invested into our listed and hybrid funds,” he said, adding the listed fund has returned 12.9 per cent over five years and the hybrid fund has returned 12 per cent over the same time frame.
Freehold also recently announced private investment finance firm Alceon Group had taken a significant shareholding in the business, leading to the launch of a new fund, the Freehold Debt Income Fund, which aims to deliver a total annualised return of 7 per cent to 8 per cent a year, paid monthly to investors.
The new fund will invest in a diversified pool of loans, originated by Alceon, that are primarily secured by registered first-ranking mortgages over Australian property. The loans largely finance development, construction and ownership across the east coast markets, underpinned by strong supply and demand fundamentals.