Strong returns during volatile markets

Until recently, residential property investment in New Zealand was the main way to gain exposure to real estate because it was, well, as ‘safe as houses’ and enabled by the banking system and tax framework.

However, increasing compliance in the residential sector and changes to bright-line tests and tax deductibility are decreasing the attractiveness of residential property investment. The bullseye placed on residential property has some investors thinking twice about how they seek exposure to property more widely, which is still an asset class with positive long-term features.

While residential property, commercial office, and retail segments of the real estate market may now seem too risky due to COVID-19 and the changing legal and tax frameworks, industrial property emerges as a potential means of wealth creation and protection positively impacted by COVID-19 and wider macro-economic trends. Could industrial property be the calm within the storm?

A key problem with industrial property investment is its inaccessibility. The price of an industrial warehouse starts at a few million to tens of millions of dollars, quality buildings are scarce, and owning one building concentrates risk. A diversified fund is key, and opportunities such as FortHill Property’s wholesale fund can provide stability and growth of investment for those seeking to hedge their net worth against inflation.

FortHill Property is a wholesale industrial property investment fund offering a unique portfolio of premium industrial properties across New Zealand. FortHill’s team of acquisition managers strategically select properties to meet selective criteria enabling them to deliver strong returns during volatile economic periods such as COVID-19.

The properties in FortHill’s fund are strategically located across the country in main centres and areas close to key freight and transport lines. Currently, FortHill has 22 buildings in the portfolio of varying size, scale, value, and tenancy.

Since the company’s inception in 2019, FortHill Property has delivered an unbroken chain of quarterly dividends and the fund has delivered double-digit annual returns. Even with a global pandemic hitting during the company’s first year in the market, FortHill Property has grown its fund value at a rate exceeding its own expectations.

Initial goals were to create a portfolio valued between $300 million and $500 million in five years, however, in the third year the total property value sits at over $560 million, thanks to four equity raises and selective property acquisitions.

So where do you go from half a billion dollars? You go to a billion and you do this by continuing to build a portfolio of high quality industrial property. FortHill are thoughtful about population growth, particularly in the ‘Golden Triangle’ and look at the macroeconomics and growth pressures in area-specific places. FortHill Property has the opportunity to turn into a $1.0b fund and with that scale comes a significant step change in opportunity.

Read the full article on Interest.co.nz by Nick Maier, General Manager of FortHill Property