Syndicated property back
Syndicated commercial property is making a comeback as an investment alternative as investors look for new options and returns in the marketplace improve.
Tuesday, April 7th 2009, 7:04AM
Oyster Group managing director Mark Winter says syndicates are becoming “flavour of the month” again after a couple of years of lean pickings.
Investor demand is being driven by a couple of factors, one of the main ones is that rates on traditional bank deposits are very low and in real terms, after tax and inflation, close to zero.
Oyster Group has done two syndicates recently and filled them both within less than three weeks each.
Winter says the investment climate for syndicates is ideal, as the group is now able to acquire commercial property at good prices.
Previously there had been a dearth of suitable property available.
Many owners are looking to exit properties at the moment due to the economic environment and that is driving prices down. At the same time interest rates are down and yields are higher than before.
Oyster Group’s most recent offer had a forecast cash return of 9.50% and paid income monthly.
Another real estate agency doing syndicates is Barfoot & Thompson.
Commercial manager John Urlich agrees that many of the people looking to invest are fixed interest investors wanting returns better than term deposits.
Urlich says the syndication market is “incredibly active”. Another player active in the market is SPI Capital. Its managing director Murray Alcock says the firm currently has 17 properties which are either under due diligence, offer or review.
He says the syndication market is likely to be strong for about a year while conditions are good.
There have been some offers with yields of more than 10%, however he expects most offers will be in the 9% range.
Some, like shopping centres, may be less than that but will still be popular with investors.
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