Commercial property funds management firm, Stronghold, has launched its suburban commercial property fund, the Stronghold Precincts Property Fund (SPPF) which will aim to offer investors a targeted income of 7% per annum.
The new open-ended fund would also offer higher liquidity, with up to 5% gross asset value (GAV) per annum on a rolling basis, and would allow ongoing investment over time hopefully giving financial planners time to discuss the investment option with their clients and let them grow familiar with the plan, the firm said.
Additionally, Stronghold said that the targeted assets for the fund would remain identical with its previous suburban precinct acquisitions, where 12 of its 14 properties were owned across eight of its 10 closed-ended trusts. However, as the SPPF’s new structure of an open-ended fund, which would accept initial investments from $25,000, should provide the significant advantage.
The firm also said that having all the commercial properties within a single structure would enhance the portfolio effect across the properties, allowing management to mix-and-match tenants according to their needs.
At launch, the fund’s portfolio would be 92% leased, with a 3.7 year weighted average lease expiry by income (WALE I) and a portfolio value of around $25 million.
Commenting on the launch of the fund, Stronghold Head of Funds Management, Bruce Anderson, said: “It is a natural evolution for Stronghold to offer an open-ended fund, allowing financial advisers and a broader group of investors the opportunity to participate in cash returns from an exceptional portfolio of commercial property assets.
Stronghold delivered average cash returns of 8.5% across its 10 closed-ended trusts in 2019, the firm said.
The Fund currently owns two direct property seed assets in the portfolio, along with potential access to acquire indirect units within several unlisted closed-ended trusts managed by Stronghold.