A strata trust that amalgamates Sydney property, launched as the first of its type in Australia, should get the attention of SMSF trustees who are looking for investments with a point of difference.
The Belayer Group’s Strata Property Amalgamation Trust (SPAT), launched last month, will only pursue amalgamations to create developments in upper-middle and upper-market suburbs in metropolitan Sydney.
It was created exclusively for wholesale investors, which now include some SMSFs, following ASIC’s decision to amend the wholesale classification in August last year.
SMSF trustees can be included in the wholesale category if they comply with the standard eligibility tests outlined in the Corporations Act.
“Although the trust is only new and most of the uptake so far has been with high net worth families who have taken a large stake already, from the feedback we’ve been hearing, we’d be collectively surprised if SMSFs don’t stick their hand up for the majority of what’s remaining,” Belayer Group chief executive Tony Huxley told selfmanagedsuper.
“The feedback we’ve been getting is that it’s really new and something that hasn’t been done before because taking advantage of these new rules around strata compulsory acquisition facilitates amalgamation in a way that’s never happened before.
“Also the feedback we’ve been getting from the commercial, financial and investment markets is that most people are a little bit over the vanilla [offerings] where you stick your money into a trust, hope for some capital growth and get a trickle of rental income.
“Not that there’s anything wrong with that, but people are looking for things that are different but also they don’t want any risk either, understandably.”
Huxley said the trust was also addressing the issue of the sheer lack of development stock in Sydney.
“Other than sticking money into an office building, there isn’t really anything out there,” he said.
“I think that’s what’s appealing to people, together with the fact that the returns for this vehicle will probably comfortably exceed what Australian real estate investment trusts will deliver over a two to three-year window.”
The minimum subscription for the fund is $50 million.
“We’re already more than halfway [to the minimum] and at the rate we’re currently going I think we’ll get the maximum subscription of $100 million,” Huxley said.
The subscription period is scheduled to close in early December.
“The minimum amount for investors is $250,000, but the majority of people we have on board are investing north of $1 million,” Huxley said.
“It’s an innovation, it’s a great opportunity and we’re really ecstatic at the feedback we’ve been getting already.”
Belayer has already started work on SPAT 2, which will be launched in late January to February 2016, in addition to four other funds the group is in the process of launching.
Huxley said he believed the New South Wales government’s impending reform of the Strata Schemes Management Act 1996 presented a massive opportunity, with the by-product of the reform being that strata-titled home unit buildings would become the subject of laws that facilitated compulsory acquisition.
