Australia’s property-based investment funds remain compelling during low interest environment

This article was originally published by International Finance on  December 21, 2020. It is reproduced here in full without amendment. 

One of Australia’s leading fund managers of property-based investments, Trilogy Funds (Trilogy), has remained a compelling option for investors despite the COVID-19 pandemic. Demonstrating investors’ appetite for industrial property, Trilogy recently completed an $18 million capital raise for its Trilogy Industrial Property Trust (Trust) with the offer closing in less than one week.

The capital raise has enabled Trilogy to bolster the property portfolio of the Trust and acquire its first industrial property in Brisbane in September 2020. Located at 37 Gravel Pit Road, Darra, the modern industrial property comprises a total of 15,300 square metres including a high bay warehouse with crane rails and a commercial-grade office over two levels.

The property is strategically positioned in one of Brisbane’s core industrial precincts at the junction of two major transport routes. It is leased to a well-established tenant with a six-year lease and three five-year option terms.

The Trust is an open-ended unlisted property trust, holding various industrial property assets located in key Australian regional and metropolitan precincts that have the potential to provide long-term cash flows to investors and could offer the opportunity to add value. The acquisition has brought the total Trust asset value of its property portfolio to greater than $70 million and seven properties.

Pictured: 37 Gravel Pit Road, Darra

Strong investor support drives demand for the industrial property sector

Trilogy Funds’ co-founder and Managing Director, Philip Ryan, said the fast capital raise was a ‘fantastic result’ which can be attributed to strong investor support and the performance of the Australian industrial property sector despite the COVID-19 pandemic.

“With Australia’s historically low interest rates, there is a very strong appetite for investments in the industrial property sector right now due to its potential for competitive yields with long-term capital growth prospects,” Mr Ryan said. “The Trust has benefited from the low Australian dollar, high commodity prices and exposure to the booming logistics sector.”

“Demand for industrial property in Australia should continue to rise—particularly as institutional investors gear their strategies toward greater exposure in the industrial sector and build their investment portfolios,” Mr Ryan said.

The industrial property sector is tipped to continue to be one of the most sought-after property asset classes, supported by underlying fundamentals of robust demand and modest supply. Mr Ryan said the Trust’s goal was to build a diverse portfolio, acquiring more assets over time in other states and regions.

“Our strategy is to look for quality investment properties that have tenants who are primarily exposed to mining, manufacturing and logistics. We are finding that exporters are benefiting from high commodity prices and a reasonably low Australian dollar relative to the US dollar,” he said.

Leading Australian-based property fund manager 

Trilogy is one of Australia’s leading fund managers of property-based investments. Operating for over 22 years, seeking income and managing risk on behalf of thousands of investors has remained at the heart of everything they do.

An Australian owned and based company, Trilogy’s goal is to increase its investors’ wealth by delivering property-based investment solutions. They specialise in managing mortgage trusts, diversified income funds and property trusts that share the common goal of providing income-focused solutions designed to help investors achieve their financial goals.

Trilogy is also one of Australia’s leading specialist lenders in development construction finance, providing personalised service and tailored loans to the residential, commercial, industrial and retail property sectors in Australia.

For investors seeking alternative investment options, Trilogy offers a range of investment opportunities through the Trilogy Monthly Income Trust, the Trilogy Enhanced Income Fund and various single asset property trusts. Investors benefit from Trilogy’s decades of experience in property development, fixed interest and cash-style investments to actively manage their investment.

In addition to the positive property outlook, Trilogy continues to perform across their portfolio of investment products.

The Trilogy Monthly Income Trust aims to provide investors with exposure to returns available through loans secured by first registered mortgages over Australian property. The Trust has been recognised as Australia’s top performing mortgage trust (by distribution rate) by SQM Research for every month in 2020 as at 31 October 2020.

In early November 2020, independent rating firm, Australia Ratings, upgraded both the Trilogy Monthly Income Trust and Trilogy Enhanced Income Fund, which invests in a portfolio of cash, cash-style assets and other financial assets, with returns enhanced via exposure to the Trilogy Monthly Income Trust, to ‘Very Strong’*.

A ‘Very Strong’ rating is the second highest rating in Australia Ratings’ scale and is used to indicate a very strong level of confidence that the Funds can deliver a risk adjusted return in line with their investment objectives.

Australia Ratings’ analyst, Maggie Callinan, said “The upgraded ratings reflect the consistent performance throughout the Covid crisis, and both the diversification and the high degree of management oversight of the portfolio.”

“The ratings also indicate the high level of confidence Australia Ratings has that the Funds will continue to deliver a strong risk adjusted return,” she added.