The lessons from Covid-19 have helped a new investment fund strike the right balance between earning a sustainable return and mitigating risk.
Targeting a 12 per cent to 14 per cent per annum return for investors, paid monthly, the Finexia Direct Accommodation Income Fund says it has balanced how we live, holiday, and invest.
Designed to take advantage of the booming domestic economy and the pent-up demand for accommodation in south-east Queensland as Australians flock to holiday hotspots such as the Gold and Sunshine coasts.
“All of our research and data shows that people just love coming to Queensland,” a spokesperson said.
“It’s not a hard sell and with more than 90 per cent of our guests coming from Australia before the pandemic, we are very comfortable with the portfolio mix.
“The Gold Coast and Sunshine Coast are currently some of the best performing regions.”
Finexia has launched the fund which it says is the first of its kind in the market and provides direct exposure to a portfolio of accommodation businesses in the key Queensland markets.
The portfolio consists of four properties with 650 rooms focussing on holiday and permanent accommodation markets.
They are holiday accommodation businesses at Broadbeach on the Gold Coast and in Noosa on the Sunshine Coast, and permanent accommodation businesses in Kippa-Ring and Morayfield in the Moreton Bay region.
The portfolio mix includes the two most popular holiday destinations in Australia—the Gold Coast and the Sunshine Coast.
Finexia says the income is strategically balanced by two long stay businesses, that were not affected by the pandemic, in outer Brisbane where vacancies have an average of under 1 per cent and rental demand is strong and on the rise.
Neil Sheather, CEO of Finexia Securities and the chair of the investment committee said that this fund and the portfolio of properties had been structured to have some core characteristics.
“These are that they provide an above market monthly income return; and offer those investors liquidity so they can come and go as their circumstances change,” he said.
“It has a diversity of locations not in CBDs and are in the high-demand regional tourist markets or where there is a severe rental shortage.
“These are areas that have historically only attracted domestic visitors, and it is a portfolio that doesn’t rely on rely solely on higher-yielding variable income sources but has a diversity of how it generates returns.
“Finally, it is managed by industry experts who have seen everything in the accommodation industry during decades of experience.”
Finexia says one of the key strengths of the fund is diversification of the portfolio.
It has been specifically structured with the Covid-19 experience to not be over-exposed in any particular market or income type.
The portfolio has a good spread of geographical diversity on a ‘Rooms by Location’ basis, and the letting type is almost equally split between long and short stay.
As well, 52 per cent of the fund’s income is generated long stay, caretaking and other income with the balance of 48 per cent generated by short-stay accommodation.
And as these are existing properties, there is no construction or delivery risk.
Finexia also believe that a good opportunity exists to grow the number of lots under management with 16 per cent of the lots in the properties currently managed by external parties.
For the short-stay properties, the average daily rates are $160 per night, catering for a market that is deep and affordable, while the permanent accommodation properties’ average weekly rents are at the most affordable end of the market and benefit from sub-1-per-cent average vacancy.
The fund, managed by ASX Listed group Finexia Financial Group (AFSL 485760), is offering six monthly liquidity to investors.
Finexia has invited investors “who can see opportunity and are looking for double digit returns” to register interest today. The fund will be closing soon. Register here.
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