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Australian Unity Geared Property Income Fund

Australian Unity Geared Property Income Fund
Rebate n/a
Minimum Investment $1,000

About the Fund
The Fund invests in the Australian Unity Property Income Fund and borrows money to increase the amount that it can invest. This is known as ‘gearing’.

pdf download Product Disclosure Statement
pdf download Fund Update
pdf download Performance Summary
pdf download Annual Report

Gearing has the effect of magnifying capital gains and income, but under adverse market conditions has the effect of magnifying losses and reducing income.

The Fund aims to cover the cost of borrowings from the income earned from the additional investment. Through this process, the Fund aims to enhance the level of return.

The level of borrowings will generally range between 40-50% of the Fund’s gross assets.

Who is the investment manager?
Australian Unity Property Limited manages the Fund.

What does the Fund invest in?
The Fund combines both investor contributions and borrowed money to primarily acquire units in the Australian Unity Property Income Fund (Underlying Fund).

The Australian Unity Property Income Fund generally invests in the following types of property investments: 

Direct property real estate
Unlisted property trusts – these are unit trusts that predominantly invest in direct property and are not listed on a stock exchange
Listed property securities – these are trusts listed on an Australian stock exchange that invest mainly in direct property and related activities.

The properties held directly or through unlisted or listed property securities include (but are not limited to) the following property sectors:

Commercial (e.g. office buildings)
Retail (e.g. shopping centres)
Industrial (e.g. warehouses)
Healthcare (e.g. hospitals or medical centres)

The Underlying Fund’s property portfolio is diversified by geographic location and sector to help reduce risk.

Typically the Underlying Fund invests 40-70% of its assets in direct property and unlisted property investment vehicles, 20-50% in listed property securities, with the balance held in cash and similar investments.

Australian Unity Geared Property Income Fund – Retail Units
Inception date April 2005
Minimum Initial Investment $1,000
Minimum Additional Investment $500
Minimum Regular Saving Plan $100 per month
Entry/Contribution Fee 4.10%
Minimum Withdrawal Amount $1,000
Exit/Withdrawal Fee Nil
Management Costs 1.95% pa
Buy/Sell Spread Buy: 2.20% Sell: Nil
Income Distributions Quarterly

What is the Fund’s investment process?

Gearing level
The Fund will use gearing to increase exposure to the underlying assets of the Fund. Gearing allows the fund to increase it’s exposure to the underlying assets. This increased exposure results in greater returns in rising markets. Conversely in contracting markets losses can be larger as a result of gearing.

The gearing level may change from time to time but will generally range between 40% and 50% of the funds total assets. The level of gearing is monitored regularly.

How does the gearing work?
The level of gearing is measured as the ratio of total debt to total gross assets of the Fund. For example, based on the Fund’s current target borrowing rate, if borrowings are $500 and gross assets (which include borrowings) are worth $1,000, the gearing ratio is 50%. At this ratio, for every $1 that has been invested in the Fund, the Fund has borrowed another $1 to purchase underlying assets.

Investors will not be required to deposit additional funds to meet borrowing costs, nor sell assets to repay borrowings or pay interest.

All obligations in this regard will be met out of the Fund. For more information on borrowing costs see ‘Borrowing’ below.

The Fund borrows at competitive rates from Australian and/or foreign financial institutions. Interest and associated borrowing costs are payable from the Fund.

The lender(s) have priority over the Fund’s assets for interest and principal repayments, in accordance with the lending arrangements in place. To minimise the risk to investors, lenders do not have additional recourse to investors if the Fund defaults on its loan facilities.

Under the Fund’s Constitution and law, it has the ability to:
borrow and raise money for the purposes of the Fund and to grant security over the assets; and
incur all types of obligations and liabilities

Volatility of returns
Gearing can magnify both gains and losses from the Fund’s investments, and investors may face increased volatility of returns from their investment. In extreme conditions, such as a dramatic, rapid market fall, you may lose all your capital.

Australian Unity recommends that you seek professional financial advice about the impact of gearing on your portfolio and whether it suits your needs.

Investment process for the underlying fund
The investment manager for Australian Unity’s Property Income Fund uses a top down thematic view to assess the various property markets in which the Fund operates. A bottom up view is used to identify undervalued property across various property sectors, investment structures and geography. Using this analysis, and separate yield analysis, a preferred allocation between direct property, unlisted and listed property securities is obtained.

The investment manager will use this information in assessing and investing in direct property assets and unlisted property securities.

The appointed listed property trust managers undertake their own analysis in creating and managing their investment portfolios.

It is not the investment manager’s current policy to use derivatives for speculative activities for the Fund. The investment manager may use derivatives for hedging purposes, to manage the interest payable on the Fund’s borrowings and for implementing portfolio positions.

More information
The Fund’s performance and unit prices are available to view at:

Important information
This investment product is issued by Australian Unity Property Limited ABN 58 079 538 499, AFS Licence No 234455. This information is intended only to provide a broad summary of this financial product. Investment decisions should not be made upon the basis of its past performance or distribution rate, since future returns will vary. You should refer to the current Product Disclosure if you wish to know more about this product. The information provided here was current at the time of publication only.

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