WA fund manager targets blend of capital growth and income
With a targeted internal rate of return of 10-12 per cent, the Westbridge Total Return Fund focuses on giving investors the ideal blend of regular income plus the potential for capital growth.
For many investors, the combination of regular income and capital growth can make for a highly sought-after property investment opportunity. Investment vehicles of this kind, however, can be hard to come by.
It’s a combination that Perth-based funds manager, Westbridge Funds Management, is looking to provide in launching their latest commercial property fund – the Westbridge Total Return Fund.
The Fund focuses on giving investors the ideal blend of regular income plus the potential for capital growth via a value-add strategy, and follows on from their oversubscribed Industrial Total Return Fund.
Damian Collins, Chairman of Westbridge Funds Management, said this fund would have a national focus.
“Where our previous Total Return Funds have tended to focus on a single asset class, this fund will encompass Australia-wide locations with assets spanning a variety of sectors.
“This gives us more of a remit to refine the opportunities we believe will drive growth and income.”
The Westbridge Total Return Fund has a targeted internal rate of return of 10-12 per cent*, with initial target distributions of 4-6 per cent p.a. paid monthly, which will be achieved via a two-pronged strategy.
A dual-focused approach
The fund will seek to identify commercial property opportunities across two key categories.
The first will be value-add properties with potential for capital improvement and/or leasing in the near-term to re-set the asset and drive an uplift in value.
The second will be assets with medium to longer-term rental income in place, but still with opportunities for refurbishment, re-set of leases and/or re-setting rents to market terms through proactive management.
“This blended approach seeks to meet investor demand for opportunities that deliver the sought-after factor of capital growth, while still enabling robust, ongoing income through strong underlying tenancies and income-based opportunities,” says Mr Collins.
The fund will target commercial properties in core locations across Australia, up to a combined total value of $100 million, with potential assets spanning the industrial, retail, hospitality, medical and office sectors.
“When blended together, the fund assets will also offer staggered lease expiries,” Mr Collins noted.
“This agile approach provides the ability to work through each asset and re-set the investment while maintaining an ongoing income stream.”
The first asset
The Westbridge Total Return Fund is in the process of acquiring its first asset, the Hampstead Hotel and a standalone First Choice Liquor store, located 4.5 kilometres northeast of Adelaide’s CBD.
The asset is leased to Queensland Venue Co., a joint venture between Coles Group and Australian Venue Co. – the second largest operator of bars, pubs and venues in Australia.
Simon Worth, Head of Capital Transactions at Westbridge, said this first acquisition was indicative of the fund’s overarching strategy.
“As well as offering a strong blue-chip income stream to seed the fund, we see potential to realise an uplift in value and income from this acquisition through capital upgrades to the hotel portion of the asset.”
The Westbridge Total Return Fund has a target four-year timeframe*. However, properties purchased for value-add opportunities may either be re-geared and held for income, or sold down to release equity on completion.
The resulting funds may be re-invested in additional commercial properties, or distributed to investors ahead of schedule, depending on the opportunities available.
“The ultimate blend”
Mr Collins says Westbridge’s strict buying conditions combined with the team’s expertise in identifying opportunities off-market and actively managing improvements, will be instrumental in driving healthy returns for investors.
“No single asset does everything for an investor, but the Westbridge Total Return Fund aims to create the ultimate blend of commercial properties.”
*Target returns are not promised nor guaranteed and are based upon a number of assumptions. The Initial Distribution may vary subject to the Fund strategy, the lease terms and other properties added to the Fund. Income distributions may be withdrawn completely. The achievement of the Target IRR returns are subject to risks. The target return is a target only, not a forecast and it might not be achieved. Please refer to the Information Memorandum (IM) for more information, noting the section on financial information and risks. Units in this Fund are issued by Mair Property Securities Limited ABN 28091623862. AFS Licence 238386. Mair Property Funds Limited ACN 151 957 676 t/a Westbridge Asset Management is the investment manager of the Fund (Manager).