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Natgen in 2025

Natgen in 2025 – busy times!

As we pass the quarter-post of 2025, the Natgen team is intensely focused and fully occupied.

It is now 5 years since the beginning of the COVID-19 pandemic, and it is fair to say that this one event has dominated the economic landscape ever since – perhaps at least until a certain inauguration ceremony in Washington DC is January this year.

In this 5-year period, we have become familiar with almost constant economic change. Quarter 1 of 2025 has been no exception. Whilst this can be challenging at times, the good news is that we at Natgen are accustomed to constant change within our markets and portfolio.

The outlook suddenly darkens

With the recent announcement of a broad tariffs regime being implemented by the United States, the general outlook for global economies has been dominated by gloomy commentary. Debt markets have responded to this by factoring in reduced interest rates in the medium term, consistent with the expectation of reduced global growth.

A comprehensive analysis of the impact of the US tariffs regime is well beyond the scope of this paper – we can all consume copious analyses over the days and weeks ahead from a broad range of analysts.

My initial reaction, however, is to feel affirmed that we have stuck to the basics when it comes to asset allocation and a concentration on defensive property assets where the provision of basic goods and services is the focus of our tenants. I believe that this has shielded us from some of the price variability in certain markets over the past 5 years and is likely to continue to do so into the future.

Of course, anyone invested in the share market currently is familiar with price variability. The current times provide a salutary contrast between share price variability and the relative stability of property assets and income production. We see this as a major benefit of commercial property investment.

Debt capital management and Interest rate management

Even prior to the recent tariffs revelations, medium term market interest rates have been moderating. As I have mentioned previously to you, Natgen keeps a constant watch on interest rate projections and market pricing over the terms of our trusts. This is the basis upon which we formulate a view on the average 5 year interest rate over the term of Natgen Investment Trusts as stated in our information memoranda.

As the medium term rates have moderated, we have taken the opportunity to hedge our interest rate positions on a number of trusts including:

And also to seek reduced margin arrangements with banks on other trust debt including:

This activity has produced meaningful reductions in interest rate costs of virtually all of the trusts mentioned above.

The aim of interest rate hedging is to limit the risk posed by interest rate variability on the performance of the trust by fixing the interest cost for a certain term. In the case of our recent hedging, we have been focussing on 3 year fixed terms, as this provides the best rates along the forward interest rates curve.

Forward interest rates curve graph

Graph source: Bloomberg, as at 31 March 2025

Consistent with our current defensive positioning, we will be proposing to maintain current distribution levels and bank any savings for the maintenance of appropriate capital buffers for the trusts. Of course, any surplus not distributed now will add to the capital base of the trust when it comes to an end and trust assets are distributed to Unitholders.

The Natgen Response

Consistent with the Natgen Investment Philosophy, we continue to seek assets which provide long-term defensive income and to acquire at prices which reflect solid value in the medium term. We seek to take advantage of the inefficiencies in the property market to target mis-priced assets.

Within this context, we continue to set target sectors based on our assessment of value. The following synopsis of our target areas outlines the value propositions we seek.

Regional Convenience Retailing

Well placed assets within solid regional locations provide steady income consistent with our aims, but generally at more favourable prices than metropolitan assets. Historical data indicates that approximately 30% of the nation’s GDP is derived in regional Australia. This figure underscores the significant economic role of regional Australia, whilst also producing the majority of the nation’s merchandise exports. Recently, the secret appears to be out and competition to acquire these assets is increasing.

Examples of Natgen trusts relying on regional convenience retail include:

Non-CBD Office

The CBD office sector was slammed during the pandemic due to stay at home mandates and the like. Work from home protocols emptied city office buildings. The whole sector has experienced downward value pressure, leading to value purchasing opportunities. Concurrently, steep rises in construction costs has made replacement of office stock unviable at current rental levels, providing existing buildings with a significant competitive rental advantage, especially in tightly-held precincts.

Natgen examples of non-CBD office assets include:

With another coming soon. 

Value-add Industrial

Industrial property across the globe has benefited from the stampede to internet shopping during the pandemic and thereafter. This has focused principally on logistics and fulfilment, however, much of the traditional industrial stock is focused on manufacturing and its supply chain. This traditional industrial stock is transitioning to more modern industrial forms with the attendant uplift in values as the repositioning occurs. Natgen remains aware of this trend and vigilant for opportunities in this market. We hope to provide you with an example of this type of investment later in 2025.

Specialist Assets

Specialist assets are identified by there strong income generation attributes and sustainability of these income streams. Again, we look to certain sectors that offer certainty in times of volatility such as medical and logistic support. Tenants in these fields tend to have strong income generation linked to government spend, essential services or blue chip clientele. A Natgen example of this is Investment Trust SP24.

Natgen Developments in 2025

Natgen is set to deliver 5 development projects in 2025, with a total value in excess of $110 million. In all cases, the developments are being delivered within the initially-assess cost envelopes for each project. This has been an amazing effort by the Natgen development team.

The pipeline will continue to grow in 2025, with a Natgen Development Trust release imminent.

Whilst the sector focus of our development projects will broaden in 2025, the fundamentals which we seek will remain unchanged. These include a proven market, good-value sales expectations, and strong cost control.

Focusing on the basics

Beyond acquisitions strategy and development delivery, we at Natgen remain focused on delivery of the basic fund management and property management services upon which our Unitholders rely.

Words which we aspire to embrace are:

  • Care
  • Dependability
  • Innovation
  • Transparency

We look forward to providing you with new opportunities in both Natgen Development Trusts and Natgen Investment Trusts in the coming weeks.

 

Thank you for your time.
Steven Goakes
Managing Director
Natgen

Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.

If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au

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Why Commercial Property Brings Stability in Volatile Times

Why Commercial Property Brings Stability in Volatile Times

Equity and currency markets have had a brutal week. Major equity indices around the world plunged as trade tensions escalated sharply. The S&P 500 dropped 6%, the Euro Stoxx 50 fell 4.6%, and the FTSE 100 closed 5.0% lower for the week—wiping out billions in value as investors tried to digest the implications of sweeping new tariffs and the risk of a full-blown trade war.

At the centre of the storm is the United States Government’s latest policy announcement introducing a 10% tariff on all US imports, with reciprocal measures escalating as high as 54% in some cases. China’s swift response—a 34% tariff on US goods, effective 10 April—has only amplified the uncertainty.

With global trade flows under pressure and financial markets struggling to reprice risk, investors are again searching for certainty.

Direct property stands out as a stabilising force.

Unlike equities, direct property doesn’t trade daily on sentiment. It is grounded in real-world fundamentals—tenants, leases, and physical assets that serve essential demand. Crucially, many sectors within direct property have low exposure to global trade shocks. The returns from medical centres, local convenience retail, self-storage, and suburban business parks are more closely tied to domestic drivers like employment, population growth, health spending and household formation, than to geopolitical flashpoints.

Historical data supports this. Research by Atchison and the Property Funds Association shows that over the long term, direct property delivers both solid returns and low volatility—an ideal mix when other assets are swinging wildly. Their analysis to 31 December 2022 shows Australian direct property produced average annual returns of 9.2% with volatility of just 2.7%. Compare that to Australian equities, which delivered a slightly lower 8.4% return but with five times the volatility (13.5%). A-REITs, despite being listed property, followed a similar path to equities with higher volatility.

Importantly, direct property is not just about income. For well-selected assets, capital growth plays a key role—particularly as cost-to-replace rises and rental demand strengthens. While REITs and listed markets feel the immediate impact of macro policy shifts like interest rate changes or trade moves, direct property values tend to move at a different pace, guided by supply, demand, and leasing fundamentals.

With equity markets now pricing in rising recession risk and investors facing a potential “deleveraging spiral,” as some analysts are calling it, capital preservation is back in fashion. Real assets—particularly direct commercial property—have long offered investors a steady, tangible anchor in their portfolio.

In uncertain times, where the outlook is as much about headlines as it is about fundamentals, it pays to hold assets that are decoupled from day-to-day sentiment. Direct property doesn’t just provide diversification—it provides refuge.

Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.

If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au

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Natgen Insights from MSCI Private Assets Briefing

Natgen Insights from MSCI Private Assets Briefing

Natgen senior management attended the MSCI Private Assets briefing led by Head of Research Benjamin Martin-Henry. MSCI tracks institutional-sized commercial property transactions in Australia over 40 years, providing fund managers with key data to benchmark market trends.

Key takeaways included:

  1. Property income remains resilient, with rental yields continuing to provide stability (see yellow bars in chart).
  2. The market downturn is correcting, though recovery will be asset-specific rather than broad-based (see green bars in chart).
  3. Transaction volumes rebounded in Q4, reaching post-COVID bounce levels.
  4. Melbourne’s office market remains weak, with ongoing challenges. There continues to be a large price gap between where buyers and sellers wish to transact. It is expected that sellers will finally have to reduce their price expectations, to meet the market and close this gap.
  5. Retail is performing strongly, particularly for assets acquired post-2020.

These insights reinforce Natgen’s investment strategy, which focuses on regional convenience retail, non-CBD office, specialist medical, industrial assets with rental reversion, and Natgen-led developments.

Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.

If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au

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The Value of Active Property Management in Commercial Real Estate

The Value of Active Property Management in Commercial Real Estate

Most people assume that once a commercial property is acquired, the hard work is done – tenants move in, rent is collected, and the investment takes care of itself. In reality, maximising returns requires an ongoing, proactive approach. This is where active property management comes in.

What is Active Property Management?

Active property management goes beyond basic rent collection and maintenance. It involves continuously monitoring and optimising a property’s financial and operational performance. For Natgen, this means leveraging in-house expertise to enhance tenant satisfaction, maintain asset value, and drive long-term income growth. Whether it’s a retail shopping centre, an office building, or a specialised medical facility, each asset requires a tailored strategy to meet both investor objectives and market demands.

Why is Active Management Important?

Commercial real estate represent tangible, real assets that are influenced by economic conditions, tenant performance, and evolving market needs. Without active oversight, properties can quickly lose value due to poor tenant retention, ongoing vacancies, escalating operational costs, or building degradation.

For retail assets like shopping centres, ensuring the right tenant mix and optimising customer experience are key to increasing foot traffic and sales. Longer dwell times lead to stronger tenant performance, which in turn improves lease renewal rates and asset stability.

In office buildings, active management helps maintain occupancy by responding to evolving tenant needs, such as flexible leasing structures or upgraded amenities. With hybrid work models more common, landlords must adapt to stay competitive, and may introduce 3rd spaces such as shared meeting rooms or end of trip facilities to increase tenant satisfaction.

Specialty assets, like medical centres, require careful management of regulatory requirements, patient accessibility, and operational efficiencies. Ensuring a well-maintained, safe, high-quality environment directly impacts the viability of tenants such as healthcare providers, who rely on a stable setting to deliver essential services.

The Natgen Approach

At Natgen, we have a hands-on, strategic approach to property management. Our dedicated in-house team works closely with tenants, contractors, and key stakeholders to enhance asset performance. Where external property managers are engaged, our internal experts remain involved—conducting regular inspections, setting strategic goals, and ensuring alignment with each Trust’s financial objectives.

Natgen’s proactive management means identifying opportunities before they become challenges. From energy-efficient upgrades to negotiating lease renewals well in advance, our focus is on preserving and growing value for investors. Close tenant relationships, regular financial reviews, and data-driven decision-making by our property experts are core to our methodology.

By actively managing assets throughout their lifecycle—planning, acquisition, operation, and eventual sale—Natgen ensures each property remains competitive, profitable, and aligned with long-term investment goals. This level of engagement is what sets us apart in the industry, and delivers consistent results for Natgen investors.

Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.

If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au

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Interest Rates and the Outlook for Commercial Property

Interest Rates and the Outlook for Commercial Property

The RBA’s decisions on interest rates play a crucial role in shaping commercial property market trends. Historically, commercial property pricing closely follows central bank interest rate cycles, with recovery often beginning as rates are cut. This relationship is reflected in capitalisation rates—or “cap rates”—which represent the yield generated from property investments.

Typically, cap rates lag behind broader market yields by 6-12 months, providing a delayed but reliable indicator of market direction. Cushman & Wakefield’s analysis (see charts) suggests that market yields may have already peaked, signalling that the next phase of the cycle could be toward lower yields, and thus higher valuations.

For commercial real estate investors, certainty around interest rates is critical. As confidence in rate stability grows, this is likely to support greater certainty in the commercial real estate market, paving the way for future price recovery once rates begin to ease.

At Natgen, we carefully evaluate market dynamics to select assets and protect assumptions within our Investment Trusts. This ensures our investors benefit from market cycles while mitigating risk and optimising long-term returns.

Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.

If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au

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Completed Development Trust UC19 Case Study

We are often asked by new investors what projects has Natgen completed and what was the return delivered to investors. This newsletter goes through the journey for unitholders in Natgen Development Trust UC19 in Upper Coomera, on the northern end of the Gold Coast.

Natgen Development Trust UC19

Location:  18 Northward Street, Upper Coomera QLD

Investment Status:  COMPLETED

Purchase Date:  April 2019

Completed Value:  $5.25M

Return:  13.1% Investment Return

Fund Term:  1 Year

Tenants:  Industrial warehouse facility

2019 – Natgen Investment Trust UC19 opened for Investment

Over the past 20 years the Natgen team have developed numerous projects including shopping centres, industrial complexes, and residential apartment buildings.

We applied our years of experience to take advantage of the substantial population growth in South East Queensland and the market dynamics which this presents.

This Trust allowed investors to participate in the potentially higher returns that can be derived from Australian development investments.

Minimum subscription for this trust was $100,000. The trust acquired a development site to build 10 premium light industry concrete panel warehouses.

Our target was to achieve a pre-tax return of at least 12% on invested funds during the life of the trust. (Being less than 12 months in this case)

Development site before completion in 2019

The design included following features:

  • Fully enclosed mezzanines with suspended ceilings;
  • Ample lighting to all areas;
  • Carpeting and air-conditioning;
  • 4.8m high roller doors with electric opening;
  • Wiring for 3 phase power throughout; and
  • Individual bathrooms and kitchenettes to all units.

Development site before completion in 2020

Design considerations included:

  • Enhanced vehicular access due to 2 street frontage;
  • Disabled access and amenities;
  • Elevated aspect and prevailing breezes;
  • Contemporary design aesthetics;
  • Future communications infrastructure requirements;
  • Interaction with future stages of the development; and
  • High visual appeal for customers of the facility.

Construction phase
An important aspect of any development project is the selection of the project design and implementation team. Of course, the builder is central to the delivery of the project and thus we do substantial due diligence before appointing the builder for any project.

The project was completed on time and on budget even though it was delivered during the Covid lockdowns.

Marketing and Sales Campaign
During the construction phase a local agent was appointed to commence the marketing campaign to sell the individual warehouses to the market.

Open and regular communication and co-operation with the agent is vital in achieving the required sales outcomes.

We take great care in selecting and managing the real estate agent relationship for all projects.

Wind up of Trust and return of capital
Once the sale process was completed the initial capital invested together with the development profits were returned to investors in the Trust.

Audited financial reporting was also circulated for taxation purposes at the end of the financial year.

Upon completion the return to unitholders amounted to 13.1%, with capital being deployed over a 10 month period.

Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.

If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au

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2024 in Review

At this time of year, we reflect upon the past 12 months and consider what the future holds. I would like to share my thoughts with you at this time.
2024 in Review - The Economy

The dominant theme in the Australian economy in 2024 has been cost of living pressures catalysed by the precipitous interest rate increases during 2023.

Perhaps the other dominant theme has been the imminent expectation of interest rates reducing very soon after the top rate was reached. This expectation, perhaps based on early commentary of easing from foreign central banks, failed to take into account that foreign rates peaked substantially higher than Australian rates.

In any event, for much of the year it has been clear that interest rate relief would be slower and shallower than initially predicted. It is this eventuality that Natgen has been planning for in the operation of all Natgen Investment Trusts.

Natgen Investment Trust activities for 2024

After not acquiring a single asset for a Natgen Investment Trust during 2023 (due to interest rate uncertainty), we finally found value returning to the market in 2024.

We commenced the year following our acquisitions theme of ‘Region Convenience Retailing’ with the purchase of a Woolworths – anchored shopping centre in Collie, WA.

Our second acquisition embodied our ‘non-CBD office’ theme, with a trust combining office assets in Cairns and the Gold Coast. These purchases were made at well below replacement value, given the precipitous rise in construction costs experienced in the post-Covid recovery period.

During a short hiatus in the middle of the year, we busied ourselves researching a new area of focus for us – specialist assets, including medical.

This research and understanding came to fruition with the purchase of the Icon Cancer Clinic for Natgen Investment Trust SP24. (We will continue to follow this theme into 2025 and beyond, where value can be isolated.)

Natgen Investment Trust SP24

Location:  Southport, Gold Coast, QLD

Investment Status:  FULLY SUBSCRIBED

Purchase Date:  September 2024

Purchase Price:  $9.65M

Return:  8% per annum (Paid Monthly)

Fund Term:  5-6 Years

Tenant:  Specialty Medical

Natgen Investment Trust QC24

Location:  116 Siganto Drive Helensvale, QLD & 76 Lake Street, Cairns QLD

Investment Status:  FULLY SUBSCRIBED

Purchase Date:  May 2024

Purchase Price:  $14.25M

Return:  9.02% per annum (Paid Monthly)

Fund Term:  5-6 Years

Tenants:  Diverse tenancy profile of national and local tenants. Tenants include Commonwealth Bank of Australia and Alder Group.

Natgen Investment Trust CO24

Location:  Johnstone Street, Collie, WA

Investment Status:  FULLY SUBSCRIBED

Purchase Date:  February 2024

Purchase Price:  $10M

Return:  8.5% per annum (Paid Monthly)

Fund Term:  5-6 Years

Tenants:  Woolworths supermarket and 8 specialty tenants

Natgen Development Trust activities for 2024
During 2023, we busied ourselves by instituting three Natgen Development Trusts to join our UC22 trust from the year earlier. This has eventuated in having 4 major development projects under construction during 2024, with all of them to be delivered during 2025.

In the latter part of 2024, we added Natgen Development Trust YB24 to the portfolio, with construction and completion of this project (at Yarrabilba) to take place during 2025.

With such an ambitious construction program during 2024, I must acknowledge the titanic efforts of Brett Nelson and Mark Jewell in development managing all of this activity with great efficiency and effectiveness. Further, we have benefited from a group of consultants and builders who have, without exception, added value and expertise to the projects. The result is that each project is proceeding well within it’s budgetary envelope.

Natgen Investment Trust YB24

Location:  Wongawallan Road, Yarrabilba, QLD

Investment Status:  FULLY SUBSCRIBED

Purchase Date:  August 2024

Completed Value:  $10.137M

Return:  25.42% Targeted Development Return

Fund Term:  18 months

Tenants:  Strata Titled

The outlook for 2025

After making a number of very significant expert appointments this year, I am very much looking forward to 2025. The Natgen team is stronger than ever before and our strategic direction and mission is clear.

Our focus on serving the investment needs of ours unitholders is sharp and clear. In order to do this, we manage relationships with a number of important and often interconnected stakeholder groups, including the tenants in Natgen properties, financiers, local authorities, our builders and consultants and many others.

Care and consideration of the Natgen team is also vital in achieving our mission – a fact which is not lost on us.

The Economy in 2025
We end 2024 with the expectation of interest rate moderation during 2024, again dependent on the market and global factors. There are a number of recent economic indicators supporting this view, including data this week indicating a moderation of wages inflation to lower than predicted levels and benign quarterly GDP numbers.The trajectory of interest rates during 2025 remains a matter of conjecture. We monitor the predications of many organisations, including the big Australian banks, the RBA economics consultancies and global commentary. My personal best guess is a combination of the NAB and Westpac positions, but of course these are only forecasts and remain subject to the vicissitudes of the market and geopolitics.

This graph plots the forecasts of the big four Australian banks for interest rate easing from the end of November 2024, through 2025 and 2026

Source: Natgen

Natgen Investment Trust activity in 2025

With this as the background, we expect to continue to acquisitions activity along our established acquisitions themes, being:

  • Regional convenience retailing;
  • Non-CBD office;
  • Value-add industrial; and
  • Specialist assets, including medical.

We expect the first manifestation of our 2025 program to be released in January 2025.

Natgen Development Trust activity in 2025
As mentioned earlier, 2025 will be the year in which 5 Natgen development trust projects will be delivered to unitholders and purchasers.We will also continue to seek future projects for investment through 2025 and into 2026 and 2027. The pipeline is being formulated currently and we look forward to releasing details during the early months of 2025.
A thank-you to You!

If you have made it this far through this rather long and rambling treatise, I would like to take this opportunity to thank you for your interest and support for Natgen. As I mentioned at our recent Christmas function, the Natgen company is, in essence, a community. Each and every member of that community, be they at the centre or at the periphery, contributes to the whole.

I look forward to further communicating with you during 2025 to update you on our progress and future initiatives.

Merry Christmas and a Happy New Year to all.

Steven Goakes
Managing Director

Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.

If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au

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Can my SMSF invest in a Natgen Trust?

Can my SMSF invest in a Natgen Trust?

Yes!

Many of our investors invest in Natgen Trusts via their self-managed super funds (SMSF).

Natgen Trusts acquire commercial property assets, and investors (including SMSFs) participate in our trusts to access commercial real estate assets for enhanced diversification and returns in their investment portfolios. This allows them to benefit from commercial property assets without the burden of managing them directly.

Being able to invest in commercial property in your SMSF is of course dependent on a number of factors, and it is always best to check with your accountant or adviser as to your own personal situation.

How much should my SMSF invest?

Typically, SMSF’s will have an investment strategy which will act like a road map for the fund’s trustees when they decide on investments. It is there to help the fund meet its sole purpose of providing members with a retirement benefit or to their dependents should a member die before retirement.

The investment strategy may be as simple as having a certain percentage of the fund’s investment allocated to each asset class, or be more complicated and prescriptive. Ultimately, the strategy is as individual as the members of the fund and set out why and how to invest these funds to meet these goals.

The Australian Tax Office (ATO) is the regulator for SMSFs and therefore have incredible oversight over how funds are run, and what assets they own. They published data [1] which shows that most SMSFs on average have anywhere between 20-32% allocation to property investments. This can be direct investment in residential real property, commercial real estate, limited recourse borrowing arrangements (LRBAs are specifically a structure to borrow to invest in property), or investment via unlisted trusts like the Natgen Investment Trusts.

[1] as at 30 June 2021

Commercial property assets help bring diversification to investment portfolios, and it is through diversification of asset classes and investments that help reduce risks and achieve more stable returns in the long run.

More about SMSFs

Self Managed Superannuation Fund (SMSF) Origins

Did you know that the Australian pension system is the 5th largest in the world (behind the USA, UK, Japan, & Canada), and mandated to grow by more than 11.5% p.a? Not bad for a country with a population (just under the size of the city of Shanghai) of ~26.7million and with around ~$3.8 trillion in savings.

Australians have been providing for one another since 1909 with the introduction of the publicly funded Aged Pension in 1909. But it wasn’t until Prime Minister Paul Keating enacted the Superannuation Guarantee on July 1st, 1992 which saw employers [1] contribute 4% of their employees’ wage to their superannuation account.

Since then, Australia’s retirement income system has been viewed as a model for other nations with its 3 pillar approach of;

  1. Publicly provided means tested age pension
  2. Mandatory private superannuation savings; and
  3. Voluntary saving (including voluntary superannuation saving) [2].

As our pension system evolved, it wasn’t until the Wallis Inquiry in 1999 which allowed small businesses and the self employed to establish and manage their own superannuation accounts – creating the very first SMSFs [3].

What is an SMSF?

A self-managed superannuation fund (SMSF) is a private fund that you can manage yourself, as distinct from an industry or retail fund where those funds choose investment and insurance options for you. But having that level of control over your own fund also comes with a number of rules and responsibilities [4] to ensure your fund meets the sole purpose test of providing retirement benefits for members.

Investment Restrictions

The Superannuation Industry (Supervision) Act 1993 (SIS Act) is the legislation outlining the various rules trustees must follow when managing an SMSF.

SMSF investments must be made on an arm’s length basis; meaning that the purchase and sale price of fund assets should always reflect the true market value, as should income from the fund assets.

There are a number of rules outlined in the SIS Act to ensure a fund meets the sole purpose test. They affect how and what your fund can investment in such as;

Related Parties and RelativesNo one associated with your fund should get a present-day benefit from its investments.
Loans and Early AccessYou can’t lend money or provide direct or indirect financial assistance from your fund to a member, or a member’s relative.
Acquiring Assets from Related PartiesSMSF trustee is prohibited from acquiring assets from trustees of the SMSF, their relatives or related entities (except for securities listed on a prescribed exchange and business real property).
In-House AssetsAn in-house asset is a loan to, an investment in, or a lease of an asset to, a related party or entity of the SMSF.
Business and real propertyTrustees need to ensure the level of investment in business real property still meets the investment strategy of the fund, including diversification of assets, liquidity and maximisation of member returns in the fund.
Collectible & Personal use assetsInvestments in such items must be made for genuine retirement purposes, not to provide any present-day benefit. The ATO outlined how this works for jewellery, artwork and other assets.
BorrowingSubject to specific exception, an SMSF trustee is prohibited from borrowing or maintaining an existing borrowing of money.

Source ATO [5]

The table above highlights some of the concepts, but of course Trustees should consult with the ATO website and their professional advisers with how this relates to their situation.

Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au
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Benefits of investing with Natgen

Benefits of Investing with Natgen

Investing in commercial property through a Natgen Investment Trust provides a number of advantages which are not necessarily available to people investing individually in commercial property. These can improve the structure and performance of your investment portfolio.

These include:

    • Scale and diversification, with access to investment in larger assets, allowing for the spreading of risk; 
    • Professional structuring of the investment to quarantine risk within the investment vehicle; 
    • Focussed and professional ongoing management; 
    • Set and forget – you will receive a monthly distribution payment, quarterly reports and annual financial statements and tax statements; 
    • Access to non-recourse borrowings on competitive terms not always available to individual investors; 
    • The security of a fully licensed professional fund manager, subject to the scrutiny of ASIC and audited annually.  

Each of these benefits provide you with further value within your investment portfolio. 

What communications do you receive as an investor in a Natgen Investment Trust?

Monthly Distribution Statements
and payment of distribution into your nominated account

Quarterly Reports
updating you on the progress of the trust

Annual Tax Statement
to claim the depreciation benefits within the trust

Annual Audited Financial Report for the trust

Non – recourse funding (no personal liability) – investing via a Natgen Investment Trust means the security for borrowings is limited to the real property assets of the Trust – your other portfolio assets are never at risk.

Trusts are geared – certain investors like SMSFs have difficulty in obtaining loans for commercial property. Natgen Investment Trusts can enable SMSFs to have a geared investment.

Competitive Interest rates – given the scale of the borrowings for a Natgen Investment Trust, we can often negotiate preferential terms with financiers

Aligned Interests – Natgen manages commercial property assets across the country.  With the unique perspective of a part-owner of the property, we take property management very personally.

Professional & Experienced Management – With the scale of our operations, Natgen either employs or has access to the professionals required for any given function in the management and operation of commercial property assets.

Scale through collective investment with others – by combining your investment amount with other like-minded investors through a Natgen Investment Trust, you can reap the benefits offered by larger property assets and through enhanced diversification of your portfolio.

Monthly Distributions – Natgen Investment Trusts make monthly income distributions, ensuring consistency of income for investors across the year.

 

Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au
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The year ahead

The 2024/25 financial year is shaping up to be a very busy one for Natgen, both in relation to existing Natgen Trusts and also for future initiatives.

In relation to Natgen Investment Trusts, we see ongoing value in various property categories based on the replacement cost of assets and the medium term impact this will inevitably have on rental rates and occupancy costs for tenants.

Well-located regional retail assets will maintain value and income generation potential. As always, we prefer retail categories which demonstrate low elasticity of demand, namely food retailing, household items retailing, and service delivery to regional consumers. These are our bread-and-butter tenants within our existing shopping centres and will continue to be vital in the future of the various Natgen portfolios.

Our sociological observations regarding non-capital city CBD office assets are playing out across the regional markets which we follow. As such, our focus remains on this style of asset as time progresses. Whilst eventually CBD office assets will reset, the short/medium term opportunities exist in our areas of focus.

Whilst premium industrial assets remain fully-priced, there remain opportunities in the industrial space where income return can be enhanced either during the latter parts of lease terms or upon the re-leasing of assets at the end of long reversionary lease terms. Natgen will seek to leverage our growing development expertise to isolate and consider these opportunities.

Development management is an important skillset within the Natgen business offering. With personnel growth in the past year, our development skills have continued to broaden. We envision future development offers during the 2024-25 year, as existing development projects mature and head toward practical completion.

Another addition to our list of value opportunities in commercial real estate is Specialty Assets. In my parlance, this includes properties which house specialty services, such as carwashes, medical centres and any other locationally-relevant businesses.

2024 Trusts To Date
Natgen Investment Trust QC24

Location:  116 Siganto Drive Helensvale, QLD & 76 Lake Street, Cairns QLD

Investment Status:  FULLY SUBSCRIBED

Purchase Date:  May 2024

Purchase Price:  $14.25M

Return:  9.02% per annum (Paid Monthly)

Fund Term:  5-6 Years

Tenants:  Diverse tenancy profile of national and local tenants. Tenants include Commonwealth Bank of Australia and Alder Group.

Natgen Investment Trust CO24

Location:  Johnstone Street, Collie, WA

Investment Status:  FULLY SUBSCRIBED

Purchase Date:  February 2024

Purchase Price:  $10M

Return:  8.5% per annum (Paid Monthly)

Fund Term:  5-6 Years

Tenants:  Woolworths supermarket and 8 specialty tenants

CO24 & QC24 Settlements + Update

Collie Central Shopping Centre, the central asset of Natgen Investment Trust CO24, was settled into the Trust on 1 May 2024.

The Natgen Investment Trust QC24 assets include:

  • 76 Lake Street, Cairns – a two storey banking / office building in the heart of Cairns. The ground floor consists of a modern banking chamber, together with business banking facilities. The upper level of the building has been refurbished and divided into office suites, leased to a variety of tenants under a head-lease arrangement to Hyatt Legal. The Trust settled the acquisition of this property on 12 July 2024.
  • 116 Siganto Drive, Helensvale – Alder Place is a trophy office building of 4 levels, facing the M1 motorway at Helensvale on the northern end of the Gold Coast. A winner of a Master Builders Association national award for design, the building provides high standard office accommodation for its four tenants, including Alder Constructions, which built the building and remains as the anchor tenant.

The Trust settled the acquisition of this property on 18 July 2024.

Leasing Update
We have recently received formal notification of the exercise of an option for renewal of the supermarket lease at Central Plaza Inverell. This option exercise ensures that Ritchie’s IGA will be leasing the premises for a further 10 years

The Natgen management team has been monitoring this upcoming lease renewal and have proactively held talks with Ritchies to ensure that we are across their ongoing needs and future expectations for the Centre. This option exercise increases the weighted average lease term for the Centre to 5.7 years.

At Natgen, we feel it is important that our investors are kept well informed as to the progress of their investments. On this basis, you can expect to hear from us as follows:

  • Monthly Distribution Statements – each month when distributions are transferred to your nominated bank account, you will receive an emailed distribution statement and an SMS confirming the transfer.
  • Quarterly Reports – in October, January and April, you will receive an update on the progress of the Trust property, including general management matters and important information about future matters.
  • Annual Report – following the end of the financial year (30 June), you will receive an Annual Report, including audited financial statements for the Trust. We aim to have the Annual Report released by the end of August each year.
  • Annual Tax Statement – with the Annual Report, you will also receive a Tax Statement outlining the information required to be included in your annual tax return.
The Year Ahead
The year ahead will, no doubt, present a series of opportunities and ongoing risks associated with the current environment. We at Natgen continue to monitor the real estate and finance markets on a daily basis to seek to formulate our ongoing views on value within the market. From time to time, we share this view with you. In every case, we seek to take a long-term perspective, as is appropriate for our asset class, and to synthesise the information available to us into a cogent position.

Our future investment offers will reflect these positions, as will our approach to managing assets for our current unitholders. We are always particularly interested in feedback from our investors and the broader community of Natgen followers and welcome it at any time.

I wish you well for the financial year ahead.
New Head of Funds Management

We are pleased to welcome Peta Tilse to the Natgen family as Head of Funds Management. Previously holding a similar position at the listed Cromwell Property Group, Peta brings over 25 years’ financial service experience gained in funds management, and wealth management. As a top performing fund manager, Peta managed institutional cash and fixed income portfolios (in excess of $5b) for Suncorp Investments, and as an Executive Leader, led Cromwell Property Group’s Retail Funds Management business.

In private wealth management, Peta worked for investment banks UBS and Goldman Sachs JBWere, later working at Levantine Wealth (a boutique wealth manager) for family offices and SMSF clients. As an asset consultant for Research-IP she worked with investment committees, designing multi-asset portfolios for wholesale clients.

Peta’s education includes a Master of Applied Finance, Graduate Diploma in Applied Finance, Bachelor of Business (Banking and Finance), and RG146. Peta has completed the FASEA exam, as well as a Diploma and Advanced Diploma in Financial Planning. She also completed the AICD short course in Governance Foundations for NFP Directors.

Peta has served on the Property Councils of Australia’s Fund Manager’s Roundtable and FINSIA’s Regional Council. Her other pro-bono activities include talking about Finance on ABC Radio, acting as a Non-Executive Director, and Chairing the Finance & Risk Committee for a charity.

At Natgen, Peta will provide our funds management business with further depth and assist in the development of new Natgen investments for the benefit of our Unitholders.

Natgen provides clients with well-considered, carefully measured commercial investment opportunities, accompanied by professional advice from our experienced leaders.

If you’d like to be notified of future investment opportunities, request an Investor Information Pack or contact us directly at invest@natgen.com.au

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