If you are new to investing or considering investing in the future, you may have heard the term ‘Property Fund Manager’ spoken about but you might be unsure what it actually means. In simple terms, property fund managers take responsibility for the management of property related assets with the main focus of maximising a property’s value for investment purposes.
Established in 2001, SG Hiscock is an award-winning boutique fund manager based in Melbourne, specialising in Australian Equities and Property Securities. Let’s take a more in depth look at property funds and the role of a property fund manager.
What is a Property Fund?
A professionally managed property fund (also known as trust or syndicate) is an alternative way to invest in property without having to outlay large amounts of capital. In many ways property funds are similar to other collective investments, whereby consumers make lump-sum investments, which are pooled together and used to purchase a range of assets managed by a professional fund manager. Some property funds invest directly in commercial property, meaning they buy actual properties including offices, shops, factories and warehouses. Whilst other funds invest indirectly, instead of buying properties, they buy shares in property companies or other property funds.
Investing in a Property Fund
Once capital has been invested, it will remain invested until the property asset is sold and then any net proceeds will be distributed among the investors. Additionally, in return for investing in the trust, investors receive distribution income from the property throughout the life of the trust. This is usually distributed in specific intervals, usually monthly, quarterly or annually. It’s important to keep in mind that distributions are not always guaranteed, nor is the return of initial capital invested. Investors may also receive a capital gain on their original investment if the value of the assets in the trust have increased upon sale. As with most investments, there is some level of risk associated with the potential reward so it is imperative to make sure the investment risk suits your personal situation.
What Does a Property Fund Manager Do?
The fund manager will choose the investment properties, either commercial, retail or industrial, to be bought by the trust. They will then manage the associated maintenance, administration and rent collection. Fund managers must also provide a Product Disclosure Statement (PDS) with information about the trust, as well as any updates about any significant changes to the trust. In essence, the role of a property fund manager may include:
- Management of a mixed portfolio
- Management of new and existing client relationships
- Property development management
- Asset enhancement
- Preparation of detailed asset plans
- Tenant liaison
- Transfer of leases
- Preparing and maintaining budgets and reporting
The main objective of a property fund manager is to maximize property value and investment returns. This means reducing expenses where possible, finding the most consistent and highest sources of revenue, and mitigating risk. Diversification is also important in real estate investments so fund managers should ensure a mix of property classifications. Most property fund managers tend to specialize in particular types of property, regions or operations so it’s important to find one that suits your individual needs and requirements.
Need more advice? SG Hiscock are the experts in property and infrastructure asset investment based in Melbourne. Get in touch with us today online or by calling (03) 9612 4600 and see how we can help you achieve your property investment goals.