New Zealand Guardian Trust's property fund is looking to raise more capital to expand the fund and increase its exposure to the much-favoured industrial sector.
New Zealand Guardian Trust's property fund is looking to raise more capital to expand the fund and increase its exposure to the much-favoured industrial sector.
Property manager Grant Unsworth says the fund, which has just over $100 million, is hoping to more than double its exposure to the industrial sector from about 12 per cent to 30 per cent.
Currently the manager is trying to buy a parcel of four properties that, if successful, will significantly increase its weighting in the industrial sector.
The price of the acquisition is undisclosed, however two of the properties are in Wellington and there is one each in Auckland and Hamilton.
Unsworth says there is "potential" for more listed property funds in New Zealand, however Guardian Trust would not list its fund until it had reached a critical mass (about $200 million).
"We're not big enough to list," he says. "We need $200 million plus to get institutional support."
Colliers Jardine, head of consultancy, research and valuation, Alan McMahon, told advisers recently, that the major portion of returns from industrial property came from income yield. He says strong investment demand for good industrial properties was driving their prices up.
"The good thing (with industrial property) is that you don't have to rely on capital gains. Most of the income comes from income yield or rent."
Buildings that have been designed and built with a special purpose in mind will dominate the sector.
On the other hand the returns in other property sectors were less attractive for the year ahead.
Retail property, while historically providing good returns, is difficult to manage as it is easy to make mistakes and the shopping centres are vulnerable to competition and sluggish retail spending.
The bright sport in this sector is what he calls the bulk spend, namely the superstore complexes.
McMahon says English data suggest the bulk retail sector is likely to produce strong returns in the future.
At present this sector has been held back by a lack of opportunities.
Unsworth says the fund expects to have liquidity of 20 per cent, split evenly between cash and listed securities.
New Zealand Guardian Trust's property fund is looking to raise more capital to expand the fund and increase its exposure to the much-favoured industrial sector.