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SMSFs eye development trusts

Specialist manager Freehold Investment Management has received significant interest from SMSF investors for its third development trust, with its capital return and opportunistic real estate offer appealing to trustees.

The Freehold Development Trust3 (FDT3) is seeking to raise $10 million in equity from wholesale investors for the land development, which will see a greenfield site converted to individual housing lots for much-needed housing in Box Hill in Sydney’s west.

The development will take between 18 to 24 months to complete.

Freehold Investment Management head of direct property Sascha Harms indicated the strong take-up by SMSF investors for FDT3 was typical of past development trust offers and said he anticipated further interest.

“At least 50 per cent of existing clients in each of the Freehold Development Trusts have invested via SMSF structures and this is a level we would expect will continue,” Harms told selfmanagedsuper.

Commenting on why SMSFs regard these direct property investments as attractive, he said there were a number of reasons.

“Firstly, our offers provide investment strategies that are typically not widely available,” he said.

“The targeted return on capital of 22 per cent to 27 per cent is also, in our opinion, attractive in this relatively low capital growth market and beneficial for SMSFs in accumulation phase.

“And finally, the investment term for FDT3 is just 18 to 24 months, enabling investors to plan for reinvestment.”

The minimum investment is $100,000, with applications closing on 30 April.

The project is being undertaken as a partnership between Freehold Investment Management and a development manager.

Both partners have significant experience in the Australian real estate sector and it is the team’s second joint project.

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