US property fund draws $60 million from Aussie investors
A property fund that will invest in US residential property has attracted in excess of $60 million from investors ahead of it closing on June 10.
Dixons Advisory’s US Masters Residential Property Fund is the first Australian-listed property trust with a primary strategy of investing directly in United States residential property.
At the end of May, Dixons had raised $43 million with Alex MacLachlan, its head of fund management, saying the strong Australia dollar was helping things along.
A spokesperson for the company told Property Observer there has been a wide mix of investors, including self-managed super funds and private investors.The fund manager has comfortably exceeded the minimum offer size of $30 million but has not yet reached of the maximum sought, $80 million (50 million units at $1.60 each).In the fund prospectus, it says US Masters will target properties that provide an un-geared net rental yield greater than 8%.
The fund will look to buy properties in the New York metropolitan area, often referred to as the Tri-State Area. This is made up of the populated areas of New Jersey, New York and Connecticut, all within “typical commuting distance of Manhattan”. The combined population of the region is around 19 million, one of the most populous in the US.
Its initial focus will be in Hudson County, New Jersey.
The prospectus provides examples of the type of properties it will look to acquire in Jersey City, Hudson County. These include two three-bedroom units 5.4kms from Manhattan valued at US$275,000 (A$258,000) with a net rental yield of 7.8% per annum and two one-bedroom apartments valued at $160,000 with a yield of 9.7% per annum.
Dixons has established an office in New York, which will be staffed by two residential property experts and a fund chief financial officer.The fund is due to start trading on the ASX on June 29.
Other funds investing in US property that have launched this year include one managed by Equiti Capital, which is investing in apartments.
According to the National Association of Realtors in Washington, Australians spent almost $600 million investing in US property last year.