22 Jan – Oliver Cox – Investment Analyst – Fisher Institutional Property Fund

Did you know that at Fisher Funds we also invest our clients money in property? We are one of the few fund managers to offer our KiwiSaver members exposure to direct investment in commercial property, through our Fisher Institutional Property Fund.  Our diversified managed funds also have exposure to this fund.

Smart active management can make a big difference to commercial property returns

We are an active investment manager, and we apply our hands on style to our investments in commercial property too.

Did you know – the value of a commercial property can vary significantly depending just on who the tenant is?…. even if the tenant pays exactly the same amount of rent as another one.

We are proud to say we reached agreement with one of the best tenants in the land to lease our Freemans Bay office building. It resulted in a big win for investors – a 30% value increase!

There are large wins to be had by upgrading tenants to improve the quality, tenure and consistency of earnings.

Valuing a commercial property

One of the key variables in the valuation of a commercial property is the capitalisation rate, commonly known as the “cap rate”.

Essentially, the cap rate is the percentage return an investor is willing accept for taking on the risk of investing. The lower (or “sharper”) the cap rate is –  the higher the value of the property.

The cap rate is determined by careful and detailed examination of recent comparable sales. The property’s physical characteristics, location, lease detail, and tenant covenant are analysed to establish the appropriate cap rate.

The Opportunity

Smart active investment management is about seeing the opportunities and taking educated risks to leverage them.