Unless an investor has access to considerable financial resources, it is difficult for investors to enjoy the benefits of investing in good quality commercial property.

Difficulties in investing

These arise because:

Well located and well tenanted properties tend to be in a price range which is beyond the means of most investors.

Even if an investor can afford to buy a commercial property, the risk is that substantially all or a very large proportion of an investor's resources will go into one property and accordingly will have the risks associated with having all the eggs in one basket.

Investors may lack the expertise necessary to properly manage a commercial property.

Opportunities of Proportional Title Ownership

Proportional title ownership gives investors the opportunity to invest in high quality property and with reduced risk and less hassle because:

a) investments can be made in multiples of $25,000.00;

b) each investor gets a separate Land Titles Office title for their interest in their own name;

c) an investor can take an interest in larger properties which would normally be outside of their financial resources;

d) the property is managed by Glaister Ennor which has substantial expertise in the management of commercial property;

e) the investor may invest in a number of different commercial properties, thereby reducing the risk of the failure of one property investment;

f) the investment is hassle free with all management being undertaken by Glaister Ennor.

Types of Proportional Title Ownership

Glaister Ennor promotes two types of proportional title ownership. One is based on maximising income and the second is based on maximising growth.

Income Investments

These proportionate title investments provide to investors regular monthly payments of income. These investments aim to deliver the maximum income whilst at the same time minimising risk. These funds tend to be for periods of 2-5 years. The term of the investment is determined by the length of the lease. In order to minimise the risks associated with the possibility of the tenant not renewing its lease at the end of the term, it is the goal of these funds to resell the property when there is at least five years of lease remaining. This ensures that the property remains an attractive proposition for a purchaser.

Features of income investments

(1) High rate of return.

(2) Access to short term tax benefits through utilising depreciation.

(3) Regular monthly payments of income.

(4) A first mortgage loan of 50-55% of the purchase price of the property is raised on a no recourse basis (investors do not give personal guarantees).

(5) Interest rate for the term of the investment up to three years is fixed.

(6) No withholding tax is deducted from payments.

(7) The property is sold at the end of the term of the investment with all of the gain on sale (or loss) shared by the investors.

Growth Investments

These investments are aimed at the longer term. These properties must be particularly well located and have a value at the end of the term of the lease which is not dependant upon the existence of a lease. They must have a lease for a reasonable term and a good tenant but above all be particularly well located. After payment of management expenses and a payment to investors which is sufficient to cover their tax liability in respect of the income, all rental received is applied in repayment of the mortgage. The amount of mortgage raised is limited to what can be repaid from rental from the tenant during the term of the lease. Accordingly, by the end of the term of the lease, the mortgage will have been repaid.

Features of growth investments

(1) Excellent location.

(2) Long term lease with good tenant.

(3) Mortgage amount limited to what can be repaid from rental received from the tenant.

(4) Sufficient rent is paid to investors to meet their tax commitments in respect of this investment.

(5) The term of investment is generally the term of the lease - 6-10 years.

The information on this web site is of a general nature only. Readers are advised to establish the applicability of information in relation to specific circumstances and not to rely solely on the information provided here.