This article originally appeared in The Courier Mail
Investment management group RAM is on the hunt for defensive retail assets with stable fixed income for its offshore clients
Offshore investors will continue to park their money in the retail sector in 2017 banking on a transparency and stable returns.
Will Gray, who heads the real estate division of Sydney-based investment management group RAM (Retail Asset Management), said sophisticated investors, especially those from Asia, were seeking defensive retail assets in Australia.
In the past six months the company has purchased three shopping centres and is on the hunt for more assets for its flagship RAM Australia Retail Property Fund with a targeted size of up to $300 million.
“We try to provide out investors with a stable fixed and secure income stream,” he said.
“We don’t focus on the super passive or super defensive shopping centre investments because the yields of around 6 per cent are too tight … and there’s no growth.
“So what we like to see in our defensive retail strategy are assets where the income stream is underpinned by non-discretionary tenants, where there is demonstratable growth and properties with yields of around 6.5 per cent to 8 per cent.”
Through RAM Australia Property Services it has bought and is now managing shopping centres in Yeppoon ($27.1 million), another in Ballina ($46.25 million) and a NightOwl in North Lakes ($6.7 million).
Brisbane-based Mr. Gray, who cut his property teeth at QIC and La Salle Management, said RAM also has its eyes on another three or four shopping centre investments and has one in Sydney and another in Brisbane currently under contract.
RAM has a number of other different investments vehicles including venture capital, fixed interest, equities and government bonds. It has four offices in Australia.
Mr. Gray said purchasing “defensive” office assets through another fund was a strategy RAM would consider in the future.
He said investors, especially those from Asia, sought transparency and certainty.
“our point of view is that if we are giving to acquire investment grade real estate at this point in the cycle you want to do it in a defensive strategy, where the yields are not volatile and income is solid,” he said.
“We are looking to hold our investments for the long to medium term.”