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Oyster is a leading New Zealand commercial property and fund manager with expertise in property fund structuring and equity raising. Oyster currently manages over 20 property funds structured for retail and wholesale investors, including Oyster Industrial, Oyster Large Format Retail Fund and the diversified Oyster Direct Property Fund.
The company partners with institutional capital and private equity investing in commercial property and holds management mandates with third party property owners across development, asset management, property and facilities management, and retail leasing.
Oyster manages a range of retail, office and industrial assets throughout New Zealand, with a combined value in excess of NZ$2.0 billion. The team comprises specialists in transactions, asset and property management, development and finance.
Oyster Property Group is 50% owned by ASX listed Cromwell Property Group.
An unlisted property fund provides an opportunity for investors to collectively invest in quality large-scale commercial property assets that may otherwise be out of reach for many investors.
Unlisted property funds typically offer a more regular income stream than share market listed property funds, with cash returns generally paid monthly. This creates a steady stream of income that can supplement an investor’s lifestyle or, in some cases, be reinvested to compound returns.
Oyster’s investment vehicles are unlisted and often preferred by investors who wish to receive monthly distributions or who wish to avoid the volatility of the share market. Our funds can consist of a single-asset or a multi-asset portfolio that provide diversification of property and income streams.
Generally, our investors have a long-term investment outlook and therefore investments with Oyster are for an indefinite period. Depending on the structure of the investment, investors may be able to exit their investment through Oyster’s secondary market facility.
At the time of a re-sale enquiry, Oyster will provide an investor a summary of the fund’s performance and comparable re-sale evidence (if applicable) to assist the investor in establishing their asking price. Investors are responsible for setting the asking price and their preferred settlement date, prior to Oyster marketing the investment for re-sale.
Once an asking price and settlement timeframe is agreed with the existing investor, they can consider the following options to sell their investment:
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market to select Oyster investors or prospective investors (without formal advertising) who have previously expressed their interest to invest in the fund;
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market to all existing Oyster investors within the fund; and/or
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market to all existing Oyster investors outside of the scheme and all prospective investors who subscribe to Oyster’s new offers and re-sales.
Oyster always take instruction from the seller to choose their preferred method(s) of sale. The past re-sales, the latest quarterly investor update, annual report and audited financial statements are made available to all prospective investors. A copy of the governing deed and latest valuation is also available on request. Oyster prepares all the sale documentation which consists of a sale & purchase agreement for the interest(s) and a deed of accession which binds the new investor to the terms of the existing scheme. The fully executed documents are then returned to Oyster and the purchaser deposits their funds to Oyster to be passed onto the vendor on settlement date. Generally, investors prefer to settle at the end of the month to avoid apportioning monthly distributions, however if both parties agree a specified settlement date, Oyster can accommodate this within the sale & purchase agreement documentation.
Oyster may charge an administration fee, of up to 2% plus GST of the transaction value, for arranging the successful transfer. This fee is always payable by the seller.
Oyster provide liquidity to investors whatever their reason for wanting to part ways with their investment. Due to our extensive investor database and investor relationships, on average our re-sales have since 2018 have gained commitment from investors in three working days or less following the initial marketing.
In instances where building(s) are sold and a scheme is wound up, all investors are paid out their proportionate share of the scheme’s equity after all costs, including any capital gain.
For Oyster’s Direct Property Fund, the fund accepts monthly redemption requests payable in the following month, subject to the fund’s monthly available funds. Oyster does not charge any fees for redemptions.
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The minimum investment in an unlisted property fund can vary.
The Oyster Direct Property Fund has a minimum investment of $10,000 with further investment made in multiples of $1,000 thereafter.
Oyster typically structures new single asset or multi-asset funds in parcels of 50,000 interests or units with a minimum investment of $50,000 and multiples of $50,000 thereafter.
At times Oyster can structure unlisted property funds in the form of a wholesale offer and these funds typically have a minimum investment of $750,000 or $1,000,000.
Oyster is licensed to manage Other Managed Investment Schemes; which are Property Syndicates/Real Property Proportionate Ownership Schemes, and Managed Investment Schemes – Managed Funds; where the Managed Funds are invested solely in real property (listed and unlisted).
Retail offers require a supervisor to hold the assets of each fund as custodian so that the property cannot be disposed of without the supervisor’s consent. The supervisor conducts all scheme meetings and Oyster are required to report to the supervisor each quarter and provide annual financial statements. The supervisor can investigate issues through their own findings, on behalf of investors or undertake investigations on behalf of the Financial Markets Authority.
The main benefit of having a supervisor is that they monitor Oyster and ensure the fund’s assets are protected and that the requirements of the governing document and the Financial Markets Conduct Act are adhered to.
Typically, Oyster’s retail offers have a minimum investment of $50,000 (or $10,000 in the case of the Oyster Direct Property Fund).
Wholesale offers do not provide the same level of protection for investors and on this basis require an investor to have a minimum investment in existing financial products, minimum net assets or business expertise in investing in financial products. Investors who invest $750,000 or more do not have to satisfy any criteria. If investors do not meet the wholesale investor requirements, they may be able to apply as an eligible investor and provide a written statement confirming their grounds for investing supported by their chartered accountant, solicitor or financial advice provider.
Typically, Oyster’s wholesale offers will be a minimum of $750,000.
Oyster believes active asset management is the best way to protect the value of, and maximise returns from, your property investments. Our specialist team of property, facility and asset managers are in constant communication with our occupiers to understand their needs and challenges. We work to develop solutions and options for them that support both the tenant and your investment.
Delivering value-enhancing initiatives is also a top priority for our team. Our active approach means we always look for opportunities to increase rental growth, improve and extend lease terms, and explore new revenue opportunities on behalf of our investors.
We ensure our properties remain relevant in the market by improving amenities and through sustainability initiatives. These elements are becoming increasingly critical to meet our occupiers’ needs and expectations. Keeping abreast of trends in this space helps us ensure consistent occupier demand.
Our team place emphasis on securing new tenants with strong financial backing, appropriate lease security and a successful trading history.
The final aspect of our approach is real-time monitoring of political, social and economic environments and how they impact the property industry. This ensures we remain agile and able to change quickly to benefit our properties, occupiers and investors.
The forecast level of return for an unlisted property fund is determined on a case-by-case basis and is largely dependent on the make-up of the underlying commercial property assets which can vary by location, asset class, tenant mix and lease term.
Oyster’s returns are stated on a per annum basis, pre-tax and net of management fees. All returns are paid to investors monthly in arrears on either the 10th, 15th or 20th of the following month.
Oyster can explain the information contained in the Product Disclosure Statement or Information Memorandum for the scheme however the decision to invest ultimately sits with the investor.
Oyster does not provide financial advice or recommendations; prospective investors are recommended to seek professional advice from a financial advice provider which considers their personal circumstances before making an investment decision.
Investors should consider the key risks to investing in an unlisted property fund. For each investment Oyster outlines the key risks to an investment in a Product Disclosure Statement or Information Memorandum depending on the type of offer.
Liquidity Risks
Oyster has an established investor and prospective investor base however there may be circumstances where market conditions or the fund’s performance impacts the ability to sell your interest(s). On this basis, Oyster cannot guarantee that there will be a willing buyer for your interest(s) or a willing buyer at an acceptable price for your interest(s).
If a property were to be sold, the property market conditions at the time would largely dictate the price that could be achieved and how long it would take to sell the property.
Bank Loan Risk
The interest payable on the bank loan is usually the largest expense for a property owner. Changes in interest rates can have a material impact on the distribution from the scheme. Interest rate risk can be managed by fixing the interest rate for a period on all or part of a loan. Oyster regularly reviews the bank loans and assesses whether fixing interest rates are of benefit. Fixing interest rates rather than using a floating rate provides certainty of the interest expense over the period that the rate is fixed.
Property Related Risk
Oyster invests in physical assets which can require substantial repairs and maintenance, or can be destroyed by fire or earthquake and the income from the property or properties is often reliant on a few major tenants paying rent. Unforeseen maintenance, structural repairs or works of a capital nature, which the landlord is responsible for, could be difficult to fund from working capital; if this occurs, bank borrowings and/or a reduction in distributions might be required.
Oyster carries out detailed annual budgeting each year to minimise unforeseen expenditure and regularly reviews the lifecycle of a building’s plant and machinery, such as lifts and air-conditioning. Each scheme has insurance in place to provide cover for material damage and loss of rents.
Tenant Default
A principal risk of commercial property investment is that a tenant will be unable to, or may chose not to, pay rent and outgoings under their lease which would ultimately reduce the income return on the investment. Reduced rental can be significant as this will reduce cash distributions to investors and may impact the value of the property investment too.
Oyster undertakes credit checks on new tenants and obtains personal guarantees or bank guarantees from tenants (where possible).
The fees and expenses payable by a scheme are outlined in the relevant Product Disclosure Statement or Information Memorandum. The fees can vary between different investment vehicles.
There will be one off fees for establishing a new scheme and acquiring the property. Ongoing fees are payable in relation to the management of the property and the scheme.