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Zenith rates GDI No.36 Perth CBD Office Trust Recommended

03 Sep 2012
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The GDI No. 36 Perth CBD Office Trust (the Trust) is a single asset, closed ended unlisted property fund.

Strategically placed to provide investors with exposure to the strong Perth office market the Trust has a fixed term of 7 years and is open to Wholesale investors only. Target distributions from the Trust are forecast by management to commence at 9.25% pa for FY13 rising to 9.50% pa in FY14 with a reasonable level of tax advantage. Trust distributions should be relatively stable over the short to medium term owing to the low level of scheduled lease expires (commencing 2015).

The Trust is issued by GDI Funds Management, a wholly owned subsidiary of the GDI Property Group (GDI) who will act as the Trust’s Investment Manager. GDI are a specialist boutique manager of unlisted property funds founded in 1993. GDI are highly active in their investment approach preferring to seek strong value-add opportunities in office markets.

Zenith’s View
Zenith believes that the Trust represents a strategic opportunity to take exposure to the Perth office market which is currently generating very strong returns from resource led demand. With contracted building rents underpinning strong growth in a very tightly held market where tenants have little opportunity to move until at least 2015 owing to scant a supply development pipeline, we see opportunities for risk aware investors to dial up the risk in their property exposure for higher rewards.

Zenith has a high conviction in the abilities of the Investment Manager. GDI have carved out a very strong track record since inception, with past trusts predominantly generating very strong returns as befitting their predominantly highly active strategies. Zenith believes that the team has shown strong discipline in their investment approach and rate their processes highly.

The Trust will sit higher up the risk curve than those real estate investment strategies usually found in the Core Enhanced space however the risks are probably not as high as those typified by most Value Add strategies we have observed.

While the Perth market faces reversionary risks from a cooling resource investment, Zenith have high confidence in GDI’s ability to manage outcomes and extract value. Zenith rates the GDI No. 36 Perth CBD Office Trust Recommended.

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