Demand for syndicated properties is exceeding the number of offers coming to market and investors need to get in quick to avoid disappointment.
Colliers International’s latest capital raising for the Home Straight Business Park in Hamilton lasted just a week.
Tim Lichtenstein, Colliers’ National Director of Syndication Investments, says the offer – of 255 interests of $50,000 – was structured to allow for two phases of allotment, primarily to accommodate the Christmas period.
“However, demand for this offer was extremely high and we received applications for the full $12.75 million equity contribution within the first week of marketing.
“This reflects the appetite of investors and shows how quickly they need to respond when offers come to market in order to avoid disappointment.”
Colliers International acts as the marketing and distribution channel for a number of big name syndication groups, such as Oyster and Vinta, Lichtenstein says.
“We have some exciting new investment opportunities coming to the market in 2016 and we expect there to be just as much interest.”
Home Straight Business Park features two office buildings 100% leased to the Ministry of Education, RD1, City Fitness and The District Espresso and Eatery, and a projected pre-tax cash return of 8.4%*, Lichtenstein says.
“The higher than average returns of syndicated investments appeal to investors, as do the sense of security, regular income distributions and passivity they provide.
“There’s also a feeling of direct ownership – people are able to drive past a building they own a share of.”
The investment format allows smaller investors to buy into large commercial properties such as Home Straight Business Park, often with big-brand tenancies and in prominent locations, which they otherwise couldn’t afford in their own right, Lichtenstein says.
“It’s a relatively low point-of-entry for investors, often with minimum investment of $50,000.”
In the last three years Colliers’ Syndication division has raised in excess of $250 million of equity for syndicated commercial property investments.
*The projected return stated is based on holding one interest (at the subscription price of $50,000) for the period from 1 April 2016 – 31 March 2017.