FAQ

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    "@type": "Question",
    "name": "How do I invest in commercial property?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "There are three typical ways individuals in Australia can invest in commercial property:

Investing in a direct property fund: Here, individuals contact a fund manager such as Charter Hall about their funds open to investment, and choose one that is suitable.
Investing in A-REITs: Here, individuals contact a stockbroker or online broking facility and identify listed commercial property trusts they wish to invest in. There are also managed funds that invest in A-REITs.
Purchasing your own asset: Be it in your own name or through your SMSF, you can purchase commercial property in a similar way to residential property. You will put down a deposit on a commercial property loan and use that to purchase a piece of real estate. Then, you manage it yourself or use a specialist property manager."
    }
  },{
    "@type": "Question",
    "name": "What are some of the advantages of a managed fund?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "Simplicity: When investing through a direct property fund, property management is undertaken by the fund manager. In this way you get to own part of a property or portfolio of properties without the burden of purchasing decisions, finding tenants and organising maintenance.
Accessibility: One big drawcard of direct property funds and A-REITs is the market these investment options open up for investors. By pooling funds together from multiple parties, managed funds and trusts have vastly greater purchasing power and can offer investors access to institutional-grade properties otherwise inaccessible to them. The minimum deposit required to invest with Charter Hall is $20,000 - far lower than the typical deposit needed for a commercial property venture.
Diverse building portfolio: In the same way that a diversified investment portfolio spreads risk across asset classes, a diverse building portfolio spreads risks across multiple buildings. Many fund managers, including Charter Hall, collect multiple buildings into a single investment option. When investors purchase units in the fund, they are purchasing shares of sometimes hundreds of properties."
    }
  },{
    "@type": "Question",
    "name": "How is performance measured?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "You will see commercial property investment performance expressed in a few ways.

The performance of a building may be described by cap rate or rental yields. The cap rate is worked out by dividing net income (income such as rent minus costs) by the building’s market value. This percentage shows you the return based on the property value and outgoing costs.

You will also see mention of WALE and occupancy rates. These don’t tell you how much money to expect back based on your investment, but can tell you the risk of investing in a particular property. If occupancy rates are low, it means there aren’t many tenants - as we know, vacancies may take time to fill.

Low WALE suggests that tenants haven’t agreed to a long lease, or the lease for higher-weighted tenants will expire soon. This could lead to future occupancy issues."
    }
  },{
    "@type": "Question",
    "name": "How is commercial property valued?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "Value in commercial property is driven by a number of factors including the size, location, and quality of the asset, as well as the number and type of tenants. These factors are assessed by both fund managers and independent valuation companies in an effort to determine the expected returns from a given property.

Valuation metrics include but are not limited to:

Occupancy: Occupancy and WALE are important figures in determining the risk and return of a commercial property. When these figures are higher, it can push up the value of a property.
Income: Similarly, the expected income of a commercial property can increase or decrease its value. While seemingly counter-intuitive, this may mean an older building has higher value than a modern building, if it is anticipated that it will earn more.
Standard of repair: The quality of the building does impact value to a degree. Buildings requiring extensive renovation, maintenance or repair may impact occupancy rates, and subsequently, anticipated returns.
Value of improvements: Fit outs and improvements can increase value, depending on the intended use of the property. For example, smart building control systems may make life easier for tenants or decrease the costs to manage the asset which could improve the building’s desirability.
Specialist property uses: Properties that have been designed to accommodate particular business types (i.e. luxury hotel accommodation) might have increased value when sold to those particular tenants."
    }
  },{
    "@type": "Question",
    "name": "How do we find suitable properties?",
    "acceptedAnswer": {
      "@type": "Answer",
      "text": "We maintain extensive relationships with potential sellers and commercial agents to generate a flow of real estate investment opportunities, both on and off market. Additionally, we actively monitor the market for properties of interest that are publicly advertised. Once properly assessed, we acquire or develop the properties in question. This decision is based on the value of the property as well as its predicted performance"
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