Specialist commercial property lender Thinktank is seeing a nascent market among SMSF trustees for mortgage loans through its two investment trusts.
Thinktank chief executive Jonathan Street said SMSF trustees are attracted to the yield minus the volatility and uncertainty of the share market.
“We have been pleasantly surprised by the initial interest in the two products,” Street said.
“No doubt recent share market volatility has helped our cause, as well as the negative focus on bank shares in the wake of the royal commission, but none of this can detract from the genuine investor interest in the two products.
“The history of mortgage trusts buying property assets means it’s critical to have an investment portfolio that is highly liquid so there is a greatly reduced capital impediment for those investors wishing to redeem.”
The more conservative Income Trust offers a 5.33 per cent annual return, while the High Yield Trust offers 8.55 per cent. Interest payments are made monthly, the minimum investment period is one year and there are no entry or exit fees for investments lasting the full term.
“In our experience, SMSF trustees are canny investors. They either get specialist advice or do their own homework before making an investment decision, especially when it’s outside the traditional asset classes of blue-chip equities and cash,” Street said.
“In this instance, the investment case for these trusts is meeting their criteria for yield and regular income. At the same time there is confidence about the ongoing strength of the commercial property market, underpinned by a growing economy and low interest rates.”
In this sector of the commercial market, ownership is usually split about fifty-fifty between owner-occupiers, for example, accountants, mechanics and warehouses, and passive, long-term investors.
Thinktank manages a loan book of $820 million comprising 1200 first mortgages.
