Syndicates are an effective way to make available investment opportunities that ordinarily would be beyond the reach of the average investor.
Our aim is to make all forms of investment accessible to our clients. In some instances, however, compelling investment opportunities are simply just too expensive for retail investors to gain access to alone. To ensure that our clients don’t miss out on the benefits these properties provide, we use a technique of pooling client funds together so that each investor owns a part of a more sizeable investment.
Syndication is often used to allow private investors benefit from owning their own piece of commercial real estate.
Investing in commercial property allows you to:
- Achieve higher cash flow returns from owning your own piece of real estate. Often commercial property investment offers high rental cash flow returns in the range of 7% – 8% per annum and sometime even higher.
- Benefit from longer lease periods. Typical commercial leases are arranged for periods between 2-3 years but in some instances for much longer periods.
- Have certainty around rental uplifts for each year of the lease term. Many commercial leases have inbuilt rental increases each year in line with increases in general price indices of 3-4%.
- Benefit from capital growth upside. The right property in the right locations which attracts high levels of demand will increase your chances of achieving capital value uplift.
- Recoup outgoings from tenants. Unlike residential leases where the owner pays the outgoings such as water rates, land tax, insurance, strata levies and property management fees, because of the “Net Lease” arrangements built into commercial leases, many of these outgoings can be recouped from the tenant in order to protect the owner from rising costs.
- Enhance value by upgrading the property, adding to the property such as adding apartments above commercial premises or redeveloping the site.
What also may not be well known by many private investors is that commercial property is not subject to the same consumer protection laws that residential property is. In many instances these laws are unfavourable towards property owners. In contrast, commercial tenancy agreements are dealt with as business contract and are negotiated at arm’s length between the parties. This means that the parties are not bound by the Tribunal system and disputes are handled through the Courts.
Authorised Representative No. 416387
Joel is the founder and CEO of UGC.
He is a licensed financial advisor with 15 years experience assisting clients grow, manage and protect their wealth.