Market Information

Market Information

Digging Into Commercial Property Trusts

Thursday, November 08, 2018

A good investor should always be looking into not only what the top options are as far as opportunities go, but also be looking off the beaten path as well. One great example of this is commercial property trusts, also known as real estate investment trusts. While these have been quietly over performing the market in general over the last few years, not everyone is aware of this as an option.

Not only are people missing out on a great opportunity with this, they also run the risk of having their entire wealth allocated solely to residential property, which adds unnecessary risk and volatility. Here’s some basic information about commercial property trusts and how to get started with them.

Understanding Commercial Property Trusts

A commercial property trust is a type of investment where investors will be able to buy a share of a commercial asset or set of assets, which will be held in a unit trust with a professional manager. Basically, this means that as opposed to someone buying a commercial property outright, a group of investors can come together to purchase a set of commercial properties, and rather than have to manage the property themselves, will have a set of financial professionals already able to do so via the trust. Just like other investments, how much the investor puts up at the front will ultimately determine their share.

This also applies in term of payment. For example, if a person was to pay for 15% of the initial deposit made by a commercial property trust, they would own 15% of the total asset. This means that they get 15% of all income distribution brought in by the property itself as well as 15% of any capital appreciation should the property be sold.

The Benefits of Commercial Property Trusts

Perhaps the biggest benefit of commercial property trusts is that it opens up a whole new set of opportunities for investors. Commercial property is a great long-term investment, but many people don’t have the means to buy a building outright. In addition, commercial property trusts also open up higher tiers of quality investments to different would-be investors.

Something else that can’t be ignored is the fact that many investors are strapped for time as well as cash. For example, an investor who tries to buy a commercial property or even get involved in a joint venture is bound to try and manage any assets they control. However, asset managers are assigned to take care of this role when working with a commercial property trust. Not only do they help on the day-to-day management of the asset, but can also be a source of valuable counsel about the industry. Part of owning commercial property is trying to find growth opportunities, and having someone with experience in your corner is key. In some cases, trusts are also charged with seeking out investment opportunities to buy property, and have the market contacts and experience to make educated decisions in this regard.

Perhaps the biggest benefit when it comes to commercial property trusts, though, is the added diversification it brings to the portfolios of many investors.  Despite this, the perception of a barrier to entry keeps many people from taking full advantage of what commercial property trusts have to offer, which is a shame considering the overall boost they can bring to your portfolio. This is where companies like PrimaryMarkets come in, serving as a global independent marketplace that lets wholesale sophisticated investors take part in secondary trading of securities and investments. In addition, we also help unlisted companies and trusts to raise new capital.

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