Retail focus pays dividends for syndication group

WRF Securities has taken a step toward its goal of becoming a funds manager and financial services entity with the closure last week of its first property syndicate.

The Elermore Syndicate was over-subscribed, so the Perth-based investment group immediately announced plans for another.

The syndicate was based on Elermore Shopping Centre at Elermore Vale in Newcastle, New South Wales.

WRF bought the site for $6.7 million and sought to raise $3.5 million through a prospectus lodged in August this year.

A minimum investment of $5000 was required for the syndicate, which has a six-year term.

Managing director Robert Nichevich was pleased with the result, saying it was a reflection of the high quality of the product, which is tax effective to 100 per cent for the first two years and has a forecast return of 10.5 per cent, paid quarterly.

“In the current uncertain economic climate and with interest rates at 30-year lows, this sort of investment is proving to be extremely attractive,” Mr Nichevich said.

“People are also starting to become more comfortable with property syndication.

“They enjoy the high returns and the

comfort of investing in property.”

A similar result is expected for WRF’s second property syndication, a K-Mart store in Armidale, NSW. Returns are forecast at more than 10 per cent.

Mr Nichevich said WRF had chosen properties in NSW as the company could avoid stamp duty under that State’s legislation and because investments in the eastern states attracted more investors.

“Stamp duty is lost money, so it becomes more attractive once that is wiped out of the equation,” he said.

“And on the east coast there is a much wider market to play with ... no one on the east coast is very interested in Western Australian property syndicates.”

However, WRF was looking at a number of local properties and would continue to do so, Mr Nichevich said.

Retail properties would be the primary focus of WRF syndicates as they generally were filled with long-term tenants, which gave investors security.

Elermore Shopping Centre was a good example of this, according to Mr Nichevich, with anchor tenants committed to long-term leases.

The Bi-Lo Supermarket, for instance, is under lease until 2014.