AM Corp expands property investments
Demand from advisers for flexible direct property investments has prompted AM Corporation to release a new hybrid property fund.
Demand from advisers for flexible direct property investments has prompted AM Corporation to release a new hybrid property fund.
Property investments general manager Ian Frost says the fund, AM Property Plus, will compete with direct and fixed term property syndicates but differs from those in the way investor funds move in and out of the fund.
He says AM has termed the structure a term property unit as it offers investors the ability to move out of the fund after four years. At the same time, investors can in-vest in the fund at any time as properties are purchased according to fund inflows.
“This is the first product of its type since around 1990 which has allowed investors to do that,” Frost says.
“We see the benefit of this approach as being counter cyclical and we can physi-cally change the value of the fund by changing the types of buildings according to the cycles.”
Investors wishing to get out of the fund before the four year limit will be able to trade the fund on the property exempt market. Frost says AM plans to list the fund on the Austock property exchange and valuing the fund quarterly.
“The result of having frequent valuations means any investors making decisions to sell or redeem are aware of the value of their investments,” Frost says.
“This avoids penalising unit holders who remain in the fund and redemptions are made at a real, not historical value.”
The fund will be fully invested into a mix of income and growth assets in the in-dustrial, retail and commercial property sectors but be limited to assets worth be-tween $10 to $30 million.
According to Frost, the fund will start to receive client inflows in late October after kicking off with $100 million to invest. Of this figure, $60 million has come from AM’s balanced growth fund with the remainder coming from borrowings.
The minimum investment is $1000 through non-superannuation channels while the limit has been removed for funds entering through AM Corp super products.
So far three properties, one each in Darwin, Melbourne and Brisbane, had been signed up with negotiations taking place to add another property in Sydney.
Frost hopes this type of product will take off and doesn’t mind if other providers roll out a similar offering as he feels it will add new drive to property.
“It is good for us and advisers if someone else brings one of these out. As a prod-uct, they become a more valid offering, this market will grow and investors have a wider choice when it comes to property investments,” Frost says.
AUTHOR
Jason Spits
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