Fat Prophets to raise $220 million global REIT-focussed fund

Fat Prophets to raise $220 million global REIT-focussed fund
Fat Prophets to raise $220 million global REIT-focussed fund

Following last month’s announcement, wealth management group Fat Prophets has released the Product Disclosure Statement (PDS) for the launch of a new fund that seeks to raise up to $220 million.

The Fat Prophets Global Property Fund will raise the sum through an IPO and intends to list on the ASX in mid-September.

It will focus on capital growth plus pay a regular half yearly distribution of 100% of the income the Fund receives on its investments.

The group, which has offices in Sydney, London and Auckland, has been operating for 17 years and managing money for investors for 12 years.

Fat Prophets calls its research and investment style a combination of Deep Value Identification with contrarian investing (going against the trend). 

The new fund will invest in listed Real Estate Investment Trusts (REITs) owning international real estate assets such as the Empire State Building in New York, while being underpinned by a core 30% investment to Australian REITs, according to its website.

The new fund will to invest in a portfolio of 70-90 globally listed real estate equities, typically REITs.  

REITs are listed Trusts which own real estate assets and pay the majority of rental income out as distributions.

According to Fat Prophets, REITs are well known for:

  • Having a different cycle to equities, therefore diversifying risk
  • Providing consistent and high yield
  • Being underpinned by tangible assets (the property they own)
  • Having lower risk and volatility than equities

“Our new fund structure will reflect the lower risk nature of REITs – we will not use derivatives, debt or shorting.  Our strategy is simply to invest into listed real estate opportunities where there is clear value,” according to Fat Prophets. 

The fund will pass through all distributions received from its investments to investors with an anticipated gross pre-tax annual yield of 5.2% p.a. 

According to Fat Prophets, diversifying into international property markets makes sense as most are significantly cheaper than Australian real estate.

 

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