DomaCom Other Property Investment Vehicles
Investor Choice Yes Limited if any
The ability for investors to select the underlying property that they want to invest in. Investors in the DomaCom Fund have complete control over their investment decision when it comes to selecting the exact properties that they wish to be exposed to. Unlisted Property Trusts, A-REITs and Syndicates – DomaCom believes that the only input investors have is whether to invest in these vehicles in order to gain exposure to the properties already selected by the promoter.
Diversification Yes Limited for residential
The ability for investors to diversify across multiple property sectors and geographical locations. Investors in the DomaCom Fund have complete control over their investment decision when it comes to selecting the properties they wish to be exposed to.

Investors have access to any property for sale in Australia by using the DomaCom Fund.

 

Unlisted Property Trusts, A-REITs and Syndicates – DomaCom believes that while diversification within Unlisted Property Trusts and A-REITs is available, the types of properties to which investors are exposed to tend to focus on one particular property class within that structure,  such as high-end commercial property or retail shopping centres.

By contrast a Syndicate, in general, only involves a single property which provides little or no diversification within the property asset class.

 

Liquidity Yes Limited except for A-REITs
The ability of investors to quickly liquidate their investment. A secondary market facility is available in the DomaCom Fund.  Using this facility, investors may be able to sell their units/interests in their property sub-fund.

 

Liquidity for Unlisted Property Trusts is dependent upon the liquidity of the Fund Manager and their ability to purchase units back from the investor.

Following a bad period in the early 1990s that impacted many Unlisted Property Trusts, many funds today retain freeze clauses in their PDSs, which enables the Fund Manager to freeze redemptions for periods up to 6 months (if the Fund Manager deems it necessary).

 

In the case of Syndicates, while each syndicate operates under its own rules, investors are generally locked in for fixed periods (e.g. 5 years or more).

 

As A-REITs are traded on the ASX, they potentially provide greater liquidity provided a buyer can be found for their units.  However, willing buyers can be difficult to find during times of severe market volatility or uncertainty.

 

Correlation Independent Variable correlation
The degree to which property returns are independent of movements in share prices. Share market movements have little or no impact on rental yields and capital values on properties within the DomaCom Fund. A-REITs are traded on the ASX.  As such, they are subject to the same conditions that can cause share prices to gain and lose value on a daily basis.

By comparison, share market movements have little or no impact on rental yields and capital values on Unlisted Property Trusts and Syndicates.

 

Gearing Yes Yes
The degree to which gearing occurs within the property structure. Gearing is now an option in the DomaCom Fund. Unlisted Property Trusts, A-REITs and Syndicates routinely use internal gearing between 30% and 60%. This internal gearing significantly changes the risk profile of these structures.

The content of the table represents DomaCom’s opinion only and the ratings have been based on its own assessment criteria.

The DomaCom Fund is an ASIC registered Managed Investment Scheme (MIS) that allows you to invest in one or more properties of your choice via a syndicate-like/fractional investment structure. This means the DomaCom Fund enables you to choose a property of your choice rather than submit to a fund manager’s selection.

Once you have chosen the property/properties and how much you wish to invest, your accredited DomaCom financial adviser will liaise with us to provide instructions for the Fund to buy on your behalf. It really is that simple!

Benefits of fractional property investing in the DomaCom Fund:

Diversification The fractional model enables you to create a diversified property portfolio and avoid the exposure you get from a single asset investment.

  • You can purchase between 1% – 100% of units in a property sub-fund.
  • You can achieve diversification across property type; rental yield, capital growth and so lowering your risk and enhancing potential returns.
Access to all properties You can invest in ALL Australian property types. It’s your choice!

  • You can choose areas you are familiar with, or have a particular preference for.

You can choose different types of property: Residential, Commercial, Industrial, Retail and/or Rural.

Governance The DomaCom Fund is backed by Australia’s oldest and largest professional Responsible Entity and Custodian.

  • The services of Perpetual Corporate Trust RE Services are provided by Perpetual Trust Services Limited ABN 48 000 142 049 AFSL No. 236648.
  • The Fund is registered with the Australian Securities and Investments Commission (ASIC).
Liquidity While there are no withdrawal rights from a sub-fund until it is terminated, the DomaCom Fund introduces a liquidity solution not previously available to the property sector.

  • You can sell some or all of your units in a sub-fund through the Fund’s secondary market facility provided there is a buyer for your units.
  • Other liquidity options are that the Fund’s Constitution provides that a sub-fund can be terminated at any time by a vote of unit holders that hold at least 75% of all units on issue and/or after 5 years with a 50% unit holder vote.
Competitive costs The DomaCom Fund has a competitive cost structure, with the added benefits of greater flexibility and control.

  • The Fund’s annual management fee is 0.88% of funds invested in a sub-fund.

Please note there are additional costs associated with the purchase and ongoing maintenance of the property.

High return on Cash Why not boost your return for Cash via the Fund’s Cash pool?

  • Earn a generous margin over the ANZ daily cash rate for all cash invested in the Cash pool, currently around 2.08% net yield.
  • You also receive the pure return on your property, i.e. yield (rent) plus capital value.
Investment risks An investment in the DomaCom Fund is subject to investment risks. Please refer to the Fund’s Product Disclosure Statement (PDS) and any relevant Supplementary Product Disclosure Statement (SPDS) for a full explanation on these.

How does it work?

  1. Each property held in the Domacom Fund is segregated into an individual sub-fund.
    • This means you buy units in a sub-fund that holds the property you have chosen.
  2. The syndicate for each property sub-fund is created via an online bookbuild process initiated by your DomaCom-authorised financial adviser.
    • Money is contributed by as many people as needed to amass sufficient capital to purchase the chosen property.
  3. As the fund’s investment manager, DomaCom outsources the conveyancing, property valuation and inspection functions, and the appointment of a buyer’s agent to purchase the property.
    • The property management functions required after the property is purchased, are also outsourced. This means you will share the cost of this due diligence and management with your fellow investors in proportion to your investment.
  4. Once a bookbuild process is fully funded and the property is purchased, a sub-fund in the Fund is created to ‘hold’ the property.
    • You receive units in the sub-fund based on your investment.
    • You receive a share of the ongoing rent and the future capital value of the property.
    • The property title is held by the Custodian of the Fund on behalf of the unit holders. The services of Perpetual Corporate Trust RE Services are provided by Perpetual Trust Services Limited ABN 48 000 142 049 AFSL No. 236648.

DomaCom has also created a secondary market to give you a liquidity solution on your property investments.

  • This means you can sell units online in much the same way as you would sell your shares.

 

Disclaimer: DomaCom Australia Limited ABN 33 153 951 770 the holder of AFSL 444365, is authorised to provide general financial product advice. Whilst DomaCom has taken all reasonable care to produce the information in this material, it does not make any representations in respect of, or warrant the accuracy, timeliness or completeness of any of the information. The information provided in this material is general information only. It does not constitute financial, tax, legal advice or a forecast. This information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on the information or deciding whether to acquire or hold a product, you should consider its appropriateness and the relevant Product Disclosure Statement (PDS) and any Supplementary Product Disclosure Statement (SPDS) available on the DomaCom website, www.domacom.com.au, or by calling 1300 365 930.