© 2016 IRED Corporation Pty Ltd

Under our Funds Management division, a Real Estate Development Fund will be structured as a managed investment scheme structured as a unit trust. Investors in a Fund are unit-holders and have a beneficial interest in the assets of the Fund. The Real Estate Development Fund will be structured as an investment product that allows investors to participate in the direct equity of a number development projects.

The following benefits can be attributed to a Development Fund.

  • Investment ready - by establishing a Development Fund, a Manager is in a position to take up a good opportunity when one is presented. Having the ready equity places a Fund in a strong position, especially when negotiating a venture with a potential partner.    

  • Limited risk - with a policy of the Fund that limits the amount of its fund into a development project and ensuring that each project is undertaken under a separate vehicle with a non-recourse senior debt, the Fund is limiting its risk.

  • Higher public profile - having a Fund with cash available will raise the group’s public profile with future partners, suppliers, investors and the media.

The Fund is structured as unit trusts unless there is a specific request of investors to structure them as joint ventures. The structure of the Fund is to be as follows.

  • A separate company will be incorporated to act as trustee of the Fund.

  • The board of directors of the trustee will consist of members appointed by the investors to ensure that the interests of the investors are properly protected.

  • Application Fee - up to 5.0% of the value of subscriptions received will be paid in the form of application or brokerage fees.

  • Project Establishment Fee - for the work involved in sourcing suitable projects for the Fund, the IRED is entitled to receive a fee of up to 3% of the total amount invested by the Fund in each individual project.

  • Development Management Fee – for managing and administering a project through the development phase, a fee of 3.5% of the total development cost.

  • Performance Fees - in respect of individual projects in which the Fund invests, where the development return exceeds an internal rate of return (IRR) of 18% on equity invested then IRED is entitled to a fee of up to 30% of the excess return above this level.

  • Asset Management Fees – after the completion of the project a fee of 2.0% of the adjusted net asset value of the fund.

  • Expense recovery - IRED is permitted under the Constitution to recover Fund-related expenses from the Fund.

IRED’s role as an Asset Manager is to deal with more fundamental and strategic issues related to a property, such as:

  • Hiring and firing of a property manger

  • Renovation and upgrade of the property

  • Refinance of the property

  • marketing and disposition of a property

 

The broad objective REDI’s asset management is to maximize property value and investment returns. This means reducing expenditures when possible, finding the most consistent and highest sources of revenue, and mitigating liability and risk, among other things.

FEE STRUCTURE

MAIN BENEFITS

STRUCTURE

ASSET MANAGEMENT