Property syndicate brings home the bacon

Property syndicator WRF Securities has claimed the 17.5 per cent return on its just-completed Armidale No.1 Property Syndicate proves that unlisted property is tax-effective.

The syndicate consisted of a shopping centre in the New South Wales town and was sold for $20 million to private investor Steve Wakeham who intends to carry out a major redevelopment of the site.

The K-Mart Plaza centre was purchased for $15.36 million in April, 2002 and the syndicate had been expected to either close or be rolled over next month.

WRF managing director Owen Lennie said investors would receive a payout of $1.25 for every $1 invested.

“This shows a 7.7 per cent a year capital growth, on top of the quarterly distributions of more than 10 per cent per annum,” he said

“This will put paid to the scepticism of many analysts about the tax effects of property syndicates.”

Investors on the top marginal rate of tax will now have to pay about 12.5 cents tax on the distributions of $1.33 for the year ending June, 2005.

The distributions during the three-year life of the syndicate were in line with prospectus forecasts. In the first year (2002) the actual distributions were 10.03 per cent compared to a forecast of 9.9 per cent. In 2004 the actual distribution was 10.35 per cent compared to a forecast of 10.2 per cent.

Lennie says the only grumble investors would have is the vendor duty.

“The New South Wales government changed the rules after they invested and took 4.3 cents for each dollar they invested, net of capital gains tax,” he said.

WRF has applied to register its next syndicate, the 925 Property Syndicate, which is expected to produce a yield in the first year of more than 8.5 per cent.

WRF now has more than $250 million of property and agribusiness assets under management and has a market capitalisation of $18 million. It recently reported first half profits of $3.7 million.