Commercial property co-investment – a powerful passive income generator

The pros and cons of term deposits, residential real estate and shares tend to be well understood amongst investors. However, many haven’t considered commercial property as an investment option, and more specifically, commercial property syndicates. With total returns (IRR) of circa 10%+ pa and the ability to generate stable passive income, it’s an investment landscape that’s hard to look past.

Since 2011, boutique Perth investment management firm, AGEM Property Group has established 38 unlisted property funds, returning an average of 14.5% Internal Rate of Return (IRR) for Passive Income Funds.

AGEM’s hands-on, full lifecycle asset management approach has earnt the firm a reputation for delivering stable, long-term returns through strategic investments irrespective of market conditions. AGEM’s formula for success is characterised by the acquisition or development of properties in locations poised for growth, paired with secured long-term leases with tenants in high-demand, non-discretionary sectors such as allied health, which provides stability for the portfolio.

“We’re committed to creating value for our investors by focusing on properties that not only provide immediate income but also demonstrate resilience over time,” says Adrian Fiore, Managing Director and Founder of AGEM Property Group. “We partner with established tenants delivering essential, counter-cyclical products and services. This can range from local businesses in healthcare and childcare to globally recognised brands.”

AGEM’s upcoming fund allows investors to share in the success of a Bayswater development with a high-profile tenancy mix including Starbucks, Hungry Jacks and 7-Eleven, which will commence operation in 2025.

“These tenants provide a level of security and consistency that is hard to match,” explains Fiore. “Our properties are carefully selected for their capacity to generate reliable, long-term passive income and capital growth, which is a key differentiator from more volatile, or conversely, modest markets.”

Construction on AGEM Property Group’s Bayswater development will commence early 2025. Artist impression only.

A unique aspect of AGEM’s proposition is genuine ‘co-investment.’ The firm operates property syndicates, which allows multiple investors to purchase an asset together – furthermore, AGEM Directors, friends and family retain a cornerstone position in each asset. AGEM management and associates currently hold 44% ownership across the portfolio – aligning financial interests with their co-investors and fostering a genuine partnership.

“When commercial property is selected and managed well, you can expect growing demand, long leases and steadily increasing rent. I play an active role in the full lifecycle of each of our investments, so I have confidence in their performance - this often isn’t the case with other investment firms. It’s important to me that we have a community of investors whose interests are genuinely aligned. I know all of our investors personally, when our investments perform well, we all share the success.”

Investing in a property syndicate format means that individuals can access larger scale properties and spread capital across various assets and sectors, thereby diversifying their portfolio, managing risk and enhancing returns.

In the context of global political and economic uncertainty, the merits of AGEM’s strategy are evident. Diversification of risk and investment in essential industries provides insulation from market fluctuations.

“In an unpredictable environment, it’s crucial for investors to seek out opportunities that can withstand economic shifts while still delivering solid returns,” Fiore notes. “While it can be tempting to delay investment decisions in the face of uncertainty, many people don’t consider the impact of not investing. In periods of high inflation, capital sitting idle is in fact declining in value. Our focus on both active de-risking and value creation means that our investments are well-positioned to perform despite the challenges of economic and inflationary pressures.”

AGEM's equal focus on achieving long-term growth, whilst also delivering passive income for investors is grounded in family values.

“We value family above all else and make time for the things that matter. It’s a value that’s shared by our investors. No doubt, the day will come when you don’t want to work in the same capacity you do now. Leveraging savings and employing a passive income strategy enables you to choose how you spend your time, while maintaining a high quality of life and financial security for yourself and your family.”

“Our investors are looking for ways to grow their wealth and generate cash without taking on excessive risk,” says Fiore. “Our properties allow them to do just that by providing dependable returns year after year.”

As AGEM continues to grow their asset portfolio, they are opening their doors to new investors.

“As we grow, we’re looking to welcome new investors who share our vision for sustainable, long-term success,” Fiore shares. “We’ve built a strong foundation, and we’re excited to bring others on our journey.”

To learn more about upcoming investment opportunities, visit agem.com.au