Direct property fund for SMSFs launched

A boutique fund manager has teamed up with a financial planning firm and a stockbroker to offer a direct property fund for the self-managed superannuation fund (SMSF) market.

Griffin Capital has joined with Certainty Financial and Joseph Palmer to launch a fund that will predominately invest in Australian direct property but will also include some local and international real estate trusts later on.

Griffin director David Allen said the fund has already attracted more than $3 million from Certainty and Joseph Palmer clients, but the manager was now looking for wider distribution.

As a result of these initial inflows, Griffin is now looking at making its first property investment that will be priced between $10 to $20 million with long-term leases.

Allen said launching a property fund in the current economic climate made sense as it was taking advantage of the traditional property cycle.

“A lot of people don’t take the return at the right point of the cycle,” he said.

“When properties are over-valued it is the time to sell to maximise the return, and when properties are undervalued, of course it is the time to buy.”

Griffin has applied this philosophy to the property portfolios it manages on behalf of some major superannuation funds, including UniSuper, Catholic Super, SunSuper and the Uniting Church.

Allen’s co-director David Websdale said the manager’s philosophy has been to maximise the returns for a mandate by selling and banking the money in anticipation of a downturn.

“We are focused on stakeholder returns and properties are sourced based on the requirements of the mandate,” he said.

“We shall use the same philosophy for the Griffin Property Fund, which has a mandate developed in partnership with our two distribution stakeholders.”

Investment properties will be screened and if a building scores 85 per cent and above, it becomes a serious acquisition prospect.

Allen said a building with a 70 per cent score that had an issue that could be dealt with would be considered, but properties with scores below that figure were rejected.

The manager has targeted the SMSF market as the fund will be a long-term investment that Websdale said suited trustees.

“We are talking of holding assets for the long-term and then selling near the peak of a cycle, which will suit the SMSF investor with a ‘buy and hold’ investment strategy,” he said.

The minimum investment for the new fund is $100,000, and Griffin is now working on securing research reports to enable the fund to be put on platforms and approved lists.