Neighbourhood and convenience retail shopping centres – driving consistent stable income returns
Article
15 October 2020
Author: Australian Unity
Neighbourhood and convenience retail shopping centres - anchored by supermarket and essential services – have proven to be a resilient asset class. The unprecedented COVID-19 pandemic has further cemented the resilience of this sector, with increased demand for essential goods and services being sought due to the restrictions set out by State governments in response to COVID-19. Convenience i.e. shopping local - has become the new normal and neighborhood supermarkets, pharmacies, specialist food retailers, banks and retailers with good omni channels are generally witnessing uplifts in turnover and footfall.
Our Diversified Property Fund (the Fund) owns a number of direct property assets that fall into these categories which have been pivotal in servicing the needs of our communities – from neighbourhood shopping centres to warehousing and distribution facilities servicing e-commerce.
The Fund’s existing portfolio includes nine properties and these have continued to deliver stable and consistent returns despite the current volatility. “This is attributable to the Fund’s strategy of acquiring defensive tenants that provide essential services including supermarkets, pharmacies, food retailing, e-commerce and refrigerated warehousing,” Nikki Panagopoulos, Fund Manager, explains.
“The Fund owns defensive income producing assets, many of which have been expanded and improved over the last five years in line with community demand, which has been an effective way to maintain consistent returns for investors.
As an example, neighborhood retail shopping centres anchored by supermarkets – to which the Fund is exposed – have proven to be a lifeline for the communities they serve particularly since March.”
Many investors value the stable and consistent income provided by the Fund, particularly those investors who are in retirement or preparing for retirement.
“One of the biggest challenges investors currently face is the scarcity of investment opportunities that can deliver consistent, solid returns relative to the risk involved. Unlisted property investments that give investors access to a stable income stream, such as those cemented by defensive essential services and consumer staples, make a lot of sense,” Ms Panagopoulos said.
When seeking regular income, unlisted property funds can be a useful addition to an investment portfolio. The chart below demonstrates the stability delivered by the Fund over a ten-year period.
3 mths%
1 yr%
3 yr%
5 yr%
7 yr%
10 yr%
Distribution return
3.59
9.01
7.95
8.28
8.36
8.27
Growth return
1.70
3.27
4.84
6.77
5.20
3.30
Total return
5.29
12.28
12.79
15.05
13.56
11.57
Benchmark distribution return
0.80
3.40
3.75
4.03
4.42
5.02
Benchmark total return
(3.99)
(2.66)
5.33
8.09
8.45
8.60
Performance as at 30 June 2020*
Current market conditions are also presenting compelling acquisition opportunities for the Fund, such as well-located industrial or office property with strong defensive covenants and long lease terms to further diversify the portfolio.
For a limited time, the Fund is offering a 30% discount on the base management fee (Discount) for all investors who apply for units offered under the Fund’s PDS dated 8 October 2020. The Discount will be paid as a rebate in two cash payments in January 2022 and January 2023 respectively. Eligibility to receive these payments is subject to satisfying all of the conditions set out in the Fund’s PDS – which is available at australianunity.com.au/wealth/dpf. Refer to the PDS for more information.
*Inception date for performance calculations is 22 August 2006. Returns are calculated after fees and expenses and assume the reinvestment of distributions. Past performance is not a reliable indicator of future performance. The Fund’s Benchmark distribution return is 1% p.a. above the average Commonwealth Government 10-year bond yield on a rolling basis over the previous five-year period. The Fund’s Benchmark total return is the MSCI/Mercer Australia Core Wholesale Monthly Property Fund Index.
Units in this Fund are issued by Australian Unity Property Limited ABN 58 079 538 499, AFS Licence No 234455. Information provided here is general information only and current at the time of publication and does not take into account your objectives, financial situation or needs. In deciding whether to acquire, hold or dispose of the product you should obtain a copy of the Product Disclosure Statement (and any relevant Supplementary Product Disclosure Statement) and seek professional financial and taxation advice. This information is intended for recipients in Australia only. Past performance is not a reliable indicator of future performance.
The purpose of this calculator is to provide an estimate into the future of the total cost of education per student. It provides a result that is based upon current assumptions, such as the cost of private and public school education (which is derived from statistical data of costs paid through the Education Savings Fund operated by Lifeplan Friendly Society Limited). It assumes an annual increase of cost at the rate of 5.3%pa which is based on ABS data and using a historical period of 16 years. The information provided by this calculator is general in nature and is not intended as financial, personal or taxation advice. Neither the calculator, nor the results take into account any individual circumstances, financial situation or needs. You should consider obtaining professional advice before making any decision after using this calculator.
Apply today for the Education Savings Fund
Please enter your details below to download the Product Disclosure Statement and the accompanying Application form for the Education Savings Fund
If you have any questions please feel free to give us a call on
1300 617 670.