Hybrid property fund offers cash option
Boutique property developer and fund manager Fortia Funds Management has launched a hybrid property fund offering a cash investment component as a means of driving the quality of the fund’s investment properties.
The Fortia Select Property Fund is structured to enable investors to buy interest bearing ‘cash units’ as a precursor to choosing to invest in ‘project units’, and also to choose between various investment periods.
An initial minimum entry of $10,000 in the cash units is invested in a deposit account with St George Bank and the interest is distributed to investors monthly on a pre-tax basis.
Investors in the cash unit can then opt without obligation to invest in the project units, based on a selection of properties offered by Fortia within the open-ended fund.
Investors in the project units can also choose to invest in either short-term projects, ranging from 18 to 36 months, medium-term projects for three to five years, or longer-term properties for seven plus years.
The discrete property projects involve land subdivisions, commercial and residential developments, as well as long-term investment properties.
Annual targeted returns vary from about 7.5 per cent to as high as 20 per cent and can also include capital growth, pre-tax and post-tax distribution, and franking credits.
Fortia managing director David Harker said the fund’s cash raising structure would allow Fortia to secure better quality property opportunities on behalf of investors, which in turn will increase the fund’s performance.
He said the fund would enable retail (and wholesale) investors to invest in institutionally structured Australian property developments.
It has been “specially designed to cater for a growing market niche where investors want the ability to choose the type and anticipated duration of their property investment”, he said.
“Our developments typically focus on $20 to $50 million projects that are generally below the radar and too small for institutional investors and too large for average mum and dad investors.”
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