Understanding the risks of unlisted property investment.
Every investment carries risk, and some of it sits outside our control.
Investing in a fund operated by Trident Capital Group involves risk. Some risks can be managed by the manager; others — market, economic and regulatory conditions among them — cannot. Where these risks materialise they may reduce or suspend distributions, reduce the value of the underlying property, and result in the loss of both income and capital.
The risks set out below are not exhaustive. They reflect our current view of the principal risks in commercial property investment: risks attaching to the property itself, risks attaching to the trust structure, and general investment risks. Before investing you should read the relevant information memorandum in full, consider your own circumstances and risk tolerance, and obtain independent professional advice.
Property risks
Valuation and sale price
A property's value moves with supply and demand, capitalisation rates, rents, lease terms and broader market conditions. We cannot guarantee capital growth, or that a sale price will meet or exceed the most recent valuation.
Property income
Income depends on tenants meeting their lease obligations. Tenant default, rent relief, or vacancy on expiry reduces net income and creates additional costs such as re-leasing incentives, capital works or legal expenses.
Capital expenditure
If capital expenditure exceeds budget — plant replacement, compliance works or make-good — funding costs rise and distributions may be reduced.
Environmental factors
Contamination, remediation obligations or underestimated restoration costs can materially affect property income and valuation, including where the cause pre-dates our ownership.
Market conditions
Increased supply, weaker tenant demand or an expansion in capitalisation rates in the relevant market can reduce both income and value.
Technology and tenant demand
Changes in how tenants use space can reduce their willingness to renew or take new leases, increasing leasing risk across the hold period.
Trust and structural risks
Illiquidity
Direct property is inherently illiquid and units in an unlisted fund are not traded on an exchange. There is no obligation on Trident Capital Group or the trustee to redeem your units, and you should expect to remain invested for the full term.
Gearing and funding
Funds borrow against the property. Leverage amplifies movements in valuation, and a covenant breach may lead to a forced sale, a demand for additional capital, or suspension of distributions. Refinancing may occur on less favourable terms.
Concentration
A fund typically holds a single property and does not acquire further assets during its term, so it does not provide portfolio diversification on its own.
Forecast returns
Target cash returns and target internal rates of return are forecasts based on assumptions about income, expenses, capital expenditure and exit pricing. Those assumptions may prove incorrect and the targets may not be achieved.
Co-ownership
Where a property is held with a co-investor, a buyer may seek a discount for a part interest, and pre-emptive rights held by a co-owner may affect the sale process and price.
Third parties and litigation
Funds rely on third parties for property management, leasing and maintenance. Non-performance by those parties, or any material dispute or litigation, can affect income and valuation.
General investment risks
Economic and market conditions
Interest rates, inflation, employment, consumer spending and credit availability all affect asset values and returns, and therefore distributions and exit pricing.
Interest rates and inflation
Sustained high interest rates or inflation increase borrowing and operating costs, and may reduce both distributions and valuations.
Insurance
Losses that are uninsured, excluded, or below the applicable deductible are borne by the fund, and premium increases reduce net income.
Force majeure
Pandemics, natural disasters, civil disruption and other events beyond our control may reduce property income and valuation.
Law, regulation and tax
Changes to legislation, regulation, planning controls or tax policy may adversely affect a fund's operation, financial performance and after-tax returns. Obtain your own tax advice.
Manager and key personnel
Performance depends in part on the continued involvement of key personnel and on the manager's ability to execute the strategy for each asset.
Our funds are available to wholesale clients only.
Trident Capital Group holds Australian Financial Services Licence No. 531934. Interests in the funds it operates are offered only to persons who qualify as wholesale clients under sections 761G and 708 of the Corporations Act 2001 (Cth), and are not available to retail clients.
Because offers are made to wholesale clients, they are not accompanied by a product disclosure statement and do not carry the disclosure, reporting and dispute-resolution protections available to retail clients. Registering your interest is not an application for units, and no offer is made until an information memorandum has been issued to you and your wholesale client status has been confirmed.
Nothing on this website constitutes financial product advice or a recommendation. It does not take account of your objectives, financial situation or needs.
Questions about risk on a specific fund?
Speak with the investment team before you make a decision.