CrowdProperty Australia has released a new fund into the market providing both wholesale and sophisticated investors access to the private real estate debt market with the aim of providing a means of portfolio diversification for SMSF trustees.
The CrowdProperty Partner Fund is looking to generate an after-fee return of 8.25 per cent a year through investing in property project loans providing Australia’s small-scale residential developers with specialist finance. It is a sector of the property market that typically has struggled to secure funding from traditional sources.
The new product requires a minimum investment amount of $25,000 and returns are distributed quarterly. Allocations to the fund are subject to a minimum investment term of six months.
CrowdProperty Australia chief executive David Ingram noted the fund can play a role in improving the diversification characteristics of SMSF portfolios.
“Recent data analysing SMSF investments showed that 43 per cent of SMSFs are not diversified enough, going against the guidelines set by the ATO in 2020,” Ingram said.
“Investing in the Partner Fund allows SMSFs to build retirement wealth while maintaining a degree of liquidity as our loans run from six to 18 months.”
He noted investors can benefit from the fund’s careful investment process by which projects are selected, as well as through the physical location of its assets.
“Our specialist property team directly originates projects and conducts a rigorous 57-step due diligence process on all loan applications, typically funding only 4 per cent of applications received,” he revealed.
“As a first mortgage fund, we’re the most senior debt in the projects. Our portfolio includes projects in major east coast cities and Adelaide and the Partner Fund is spread across all projects, meaning it’s diversified by project type, loan term and geographic location.”
CrowdProperty has reviewed over $360 million in project loan applications, having entered the Australian market in 2021.
Key words:
Private real estate debt market, portfolio diversification, sophisticated investors.
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