Do you have a question about Properties & Pathways’ process, investment model or expertise? Try finding the answer in our frequently asked questions.
What due diligence do you perform prior to purchase?
Properties & Pathways completes an extremely thorough due diligence examination of the property to protect each investors interest and to mitigate investor risk wherever possible. Our typical due diligence includes:
- Review and legal advice on all leases. This includes thorough examination of lease options, lease length, general and specific terms of the lease and any onerous or adverse conditions etc., particularly anything which may affect the property cash flow or value
- Review and understanding of neighbouring tenants and tenant composition
- Review and understanding of market rents in the area
- Structural integrity of the building and machinery including: engineering report, survey, machinery report, air-conditioner report, roof and awnings report etc.
- Traffic report and understanding of demographic
- Valuation report from a qualified and independent valuer (on the bank’s panel)
- Discussion with the local council to assess any future development in the vicinity which may adversely or positively affect the prospective property
- Tenant history including arrears schedules, aged debtors, tenant turnover, etc
- Property history including vacancy rates, historical repairs, maintenance expenditure, etc.
- Inspection and viewing of the property for location, convenience, ease of access, traffic flow, etc.
There are no short cuts when performing a due diligence. A little caution will save a lot of regret.
What structure do you use to purchase each property?
Each property is purchased in a separate unit trust with a corporate trustee (Properties & Pathways Pty Ltd). This is the most tax effective structure for property acquisition which minimises land tax liability.
More importantly, it ensures each syndicate operates separately and distinctly from one another to prevent the cross-collateralisation of debt and to protect each individual investor’s assets.
Effectively, any investor purchases units in the unit trust, which secures a direct ownership of the property in proportion to their investment amount.
Who makes decisions regarding each property?
The trustee (Properties & Pathways Pty Ltd) makes all management decisions, in order to maintain and grow the value of the property. Having a vested interest in the property guarantees the trustee will make the most astute decisions to protect their and their investor’s investment.
Properties & Pathways Pty Ltd also maintains a ‘reserve fund’ to shield investor returns from immediate threat. It allows a solid buffer to efficiently mitigate the risk of tenant vacancy, economic downturn, capital and/or structural requirement, while also allowing to take swift advantage of value-add opportunities as or when they arise.
While the reserve fund is not a fail-safe, it certainly buffers investors from immediate shock and adverse conditions which can happen from time to time.
Can I exit my investment whenever I like?
At any time during the life of the syndicate, each investor (unit holder) may offer their units for sale in order to ‘get out’. The only prerequisite to do so is they must first offer their units to the existing unit holders. This ensures the existing unit holders have the first opportunity to increase their unit holding before inviting a new party into the unit trust.
The Trustee (Properties & Pathways) will manage the sale and purchase of units at all times to protect the price of everyone’s investment. As the trustees are also unit holders, it’s in their interest (and also the interest of each investor) to keep the price of the units consistent with the value of the property (in other words, as high as possible). Normal commissions will apply for the trustees’ service/expertise in this regard – typically 1% (although subject to change).
Properties & Pathways have new and existing investors waiting to invest in the next syndicate, who may be willing to acquire an existing unit holding given the opportunity.
How much can I invest?
There is no upper limit to investment, however, the cost of the property will ultimately determine how much is necessary in order to secure it. Properties & Pathways always gives preference to repeat investors (to reward their continuing loyalty) after which they accept investment parcels on a first come first serve basis.
What is the minimum amount I need to invest?
The current minimum investment parcel is $200,000.00*
*This is subject to change and dependent on the property being syndicated. As such, we reserve the right to change the minimum investment threshold at any time without prior notice. We may consider lower investment amounts in particular circumstances.
Please contact us if you wish to discuss further.
Who can invest with Properties & Pathways?
The majority of our investors are “wholesale investors”. You will meet the eligibility criteria of a wholesale investor if you:
- Have assets of at least $2.5 million; or
- Have had an income of at least $250,000 per annum over the past two years; or
- Control a company or trust which meets the requirements of either item 1 or 2 (above); or
- Invest over $500,000 into one of Properties & Pathways syndicates.
Please advise if you do not meet these criteria as we are eligible for exemptions in particular circumstances and are willing to maintain flexibility for potential long-term investors.
What documents do I need to Invest?
You will need to complete and supply the following documentation to invest:
- Copy of Personal Identification (Driver’s licence will suffice for Australian citizens and passport for foreign citizens)
- Investor Details Form (provided on request)
- Application for Units (provided on request)
- Accountant’s Certificate – certifying you (or your company, SMSF or Trust) are a wholesale investor (as outlined above).
Documentation can be requested by emailing us at email@example.com.
What is an AFSL? Does Properties & Pathways have an AFSL?
AFSL stands for “Australian Financial Services Licence”. Properties & Pathways have been granted a specific licence from ASIC (Australian Securities & Investment Commission) based on many years of prior experience and expertise managing substantial commercial assets across Australia. The AFSL allows them to raise money from wholesale investors in order to acquire and manage commercial property on their behalf.
How often are you audited?
Properties & Pathways is audited in terms of its AFS License and also in respect of its accounting practices. These audits are conducted once a year and rely heavily on the quarterly compliance reviews completed by external compliance contractors.
An audit is a time consuming and costly exercise. However, it is absolutely necessary to ensure there are no conflicts of interest and to ensure investors are at ease with their investment, in the knowledge Properties & Pathways investments are being handled with due care and professionalism.
Will I receive all tax return documentation?
Yes. Properties & Pathways contracts an external accountant who completes an audit and compiles all tax return documentation at the end of each financial year. This documentation will be distributed to each investor in a timely manner.
Is my personal information protected?
Absolutely. Properties & Pathways is governed by the Privacy Act at all times and ensures all personal information is securely stored and protected.
Can Self-Managed Superannuation Funds (SMSFs) Invest?
Yes. A large percentage of Properties & Pathways investors use their self-managed super funds as an effective investment vehicle to shelter their investment earnings and profit from tax. Each syndicate meets the criteria of the SIS Act and therefore is an effective investment vehicle to capitalise on tax effective cash flows and capital growth.
Can international companies, trusts and individuals invest with Properties & Pathways?
Yes. Properties & Pathways has already facilitated international investment from foreign parties, particularly from South Africa and Britain. We have also identified the most tax effective structuring for foreign investment to ensure the best possible return for each investor, regardless of residency. If you are an international investor, contact us for more information.
What is the lifespan of each syndicate?
Each syndicate is established with an approximate lifespan. Typically, our syndicates range from 4-7 years. However, each syndicate is assessed on its own merits, and any opportunity to maximise value is sought throughout the life of the asset.
Many factors are considered before any asset is divested. These include, but are not limited to:
- Tenant composition and length of tenure
- Rental platform
- Interest rate fluctuations
- Property market conditions
- Economic conditions
- Regulatory and or legal changes
- Environmental and/or planning risk
- Leasing updates
- Capital expenditure
- Unsolicited offers