Objective
The Trust seeks to provide investors with attractive income returns and potential for capital growth, by investing in stable income-producing properties in the US. By systematic hedging of foreign currency and interest rate risk, the Trust aims to deliver consistent A$ income with the potential for capital appreciation.
Strategy
The Trust has been formed to provide investors the opportunity to gain exposure through an ASX listed vehicle to stable income-producing real estate located in the US. The philosophy underlying this investment strategy is to provide a strong income component to the overall return and to remove exposure to risks associated with construction, development and leasing up of new properties.
The Manager will seek to optimise returns to investors by working with the Asset Manager to:
  •  proactively manage the portfolio of the Trust;

  • identify properties for acquisition as appropriate opportunities arise in line with the investment strategy for the Trust; and

  • pursue the sale of properties where this is considered to be in the best interests of the investors.
Active property management strategy

The management of the properties is overseen by the Manager which can call on the skills of Rubicon Advisory LLC (a company related to the Manager), the Asset Manager (Greenwich Group International), the joint venture partners (Parkway and NGP) as well as external service providers.

In overseeing the management of the properties, the Manager focuses on opportunities to enhance risk adjusted returns to investors.

Given the cyclical nature of the property markets, the Manager reserves the right to sell any of the Trust’s interests in the properties according to the property market conditions at any future point in time. The Manager only sells an interest in the properties in circumstances where the proceeds of an early sale are anticipated by the Manager, or to be more favourable to the investors than holding the interest in the property.

It is the Manager’s intention to make a recommendation to investors on the sale of the properties approximately seven years after their acquisition.

 
Future acquisitions and investment criteria

The Trust will target stable income-producing real estate investments that add to the diversification or enhancement of the Trust’s portfolio by property type, location, tenant and lease maturity. In considering future acquisitions, the key criterion will be the enhancement of risk-adjusted returns to investors, taking into account both initial and expected future returns. Benefits to investors may include the potential to increase earnings and distributions and the reduction in risk associated with additional diversification of the portfolio of the Trust. For future acquisitions, the Manager will target properties satisfying the following criteria (to be reviewed annually):

  • commercial office, retail or industrial properties;

  • well leased (high occupancy, stable tenants with strong covenants and average lease terms of four years or more to run);

  • in good condition with low capital expenditure requirements; and

  • acquired at fair value.

The Manager will seek to make future acquisitions in joint ventures with well established operating partners. This approach provides the significant benefits of utilising their local market skills and knowledge and maintaining a strong alignment of interests.