Managed Funds 'Income Funds'...> 8% pa income, do they exist??

Hi there,

When I looked at some tables in Smart Investor mag. briefly at the newsagent recently, the 'income funds' listed were returning less than an ING account would...do income funds even exist where the income generated is much higher than this, eg. >8% pa? (Not including Navra Income Fund, and not including debentures).

Or perhaps I am looking in the wrong place??

Thanks.

 

Since the LPT sector has had a large correction it is now back into the “income” territory.

While this isn’t a traditional "income fund" as such, you could buying something like SLF (XPJ index tracker) which is yielding an ok 8.5% paid 3 monthly.

 

if only you could hedge that against lossing any more capital we could be on a gold mind...

 

Yep - Not for me.. Not worth the risk for 8.5%

 

But the yield is only going to increase.... CBD rents are predicted to increase by 20% this year alone....

Every $ increase in rent increases buildings by $15, some as much as $20 (depending on asset qualities), so you can easily calulate how much value this adds ontop of an asset. A building with annual rent of $7mil (so something worth roughly $100m) with rents go up 20% the building value increases to $120m.

Your yield the following year is going to be positive geared.... along with the capital growth...

Over the past few years building prices have gone up due to people accepting lower yields, this is coming to a stop and its the rent who is going to add value (well occurding to Colliers and Savills anyway). The only way you can loose money in a UPF (as value is derived directly from asset prices unlike LPTs) is if the cap rates (yield accepted) increase.

The 8.5% shows how much the sector is currently at a discount to its NTA's... The quality of asset which returns 8.5% is a neighbourhood shopping centre in the middle of Bourke, or a 25 year old factory which has no redevelopment potential. I would of said average yields is around the 7% mark (as ive used in my figres).

**Interest - i have spend the past month dealing with retail, industrial and commercial property valuations for a large listed property company which is where the bulk of my detailed knowledge was obtained**

 

Hi Dave

I have always seen that commercial property is linked directly to the prevailing interest rate.

As we are now going into a period of increasing interest rates the yields for the com sector will need to increase to stay attractive.

There are two ways for the yield to improve one is the increase in rent the other is for a drop in value. I suspect it is the latter that we are more likely to see in the future.

One argument against an increase in rent is a possible slow down by business brought about due to a restriction in credit.


Cheers

 

Which ones are these??

Thanks.

 

Why do you need 'income funds' paying 8% when you've got this:
http://www.invested.com.au/2/person-person-loan-8-a-27651/

Look what you get, the offer of a lifetime:

BR

 

I wonder how much risk this carries if a normal bank wont lend the money!