Farm Weekly

Seven per cent return boosts farm incomes

Westbridge's most recent commercial property fund, the Diversified Property Fund No. 4 is delivering target returns of seven per cent annually.

This is branded content for Westbridge Funds Management.

Irregular and unpredictable income can see farmers facing considerable cashflow challenges. But there is a solution.

Damian Collins, Chairman of leading Perth commercial property experts, Westbridge Funds Management, says a professionally managed commercial property fund can deliver strong returns, with regular distributions - often paid monthly - that provide a valuable supplement to farm income.

Westbridge's most recent commercial property fund, the Diversified Property Fund No. 4 is delivering target returns of seven per cent annually, due to the fund's strong rental cashflow. Investors receive these returns as monthly distributions, which gives farmers a reliable source of non-farm income.

"Feedback from our investors in the farming community is that the frequency and predictability of Westbridge distributions makes a valuable difference smoothing out farm income and managing cashflow," says Mr Collins.

The advantages of commercial property

Strong, regular income has always been a compelling feature of commercial property. It's the result of rental yields that are higher than for residential property, coupled with longer leases.

However, for investors, a commercial property fund is a far easier alternative to owning commercial property directly. It also means being able to access superior properties.

Explaining the advantage of a commercial property fund, Mr Collins says Westbridge actively looks for "high value, high quality properties - assets priced beyond the reach of individual investors".

The types of properties involved are often major industrial estates, which attract a mix of household-name tenants.

These tenants are national or multinational companies that don't want the disruption of relocating their business. So, they commit to long leases - often five years or more, which brings consistent rental income to investors.

"This gives farmers reassurance that they have a regular source of non-farm income to manage those periods when income from farming activities dwindles to a trickle," adds Mr Collins.

Potential for capital growth

Commercial property also has the potential to deliver healthy long term capital growth.

In any successful real estate investment, location is one of many critical factors. A commercial property needs to be in a location that is attractive to both tenants and future buyers.

Knowing what to look for in a quality commercial property calls for experience and considerable research.

"The skilled Westbridge team always undertakes considerable due diligence before we invest in a property," Mr Collins says.

"We prefer locations with excellent transport links to nearby freight facilities such as ports and airports, and close to residential hubs that provide a local workforce."

National tenants, blue ribbon locations

As a guide to the commercial property assets Westbridge invests in, the Westbridge Diversified Fund No. 4 holds two assets to date - the first being adjoining industrial distribution facilities in Broadmeadows, Victoria and, more recently, an office/warehouse logistics facility in Canning Vale, WA.

The Canning Vale property sits on a 2.3-hectare site of prime industrial land in one of Perth's premier industrial estates, located just 19 kilometres south of the CBD. The property is fully leased to Blackwoods, a wholly owned subsidiary of Wesfarmers Limited.

"The Canning Vale asset is a great addition to the Westbridge Diversified Fund No. 4," says Mr Collins. "And we are targeting further acquisitions over the next 12 months.

This gives farmers a valuable opportunity to invest with Westbridge and experience the benefits of commercial property including a regular source of income separate from farm revenue.

Sign up for future opportunities at westbridgefunds.com.au or call the Westbridge team on 08 9321 5566.

This is branded content for Westbridge Funds Management.