The Australian property opportunity targeting double-digit returns

"If you look at Australia more broadly, industrial's been one of the highest-performing sectors for the last several years," says Rudd. 

"And if you then look at the Perth industrial market, it's been one of the highest-performing markets across all of Australia. And really what's driving both the Australia picture and the Perth picture is this supply and demand imbalance."

Creating value 

At a time when property investors are understandably jittery, Rudd says Realside remain selective and focused, and that discipline is key to performance. 

"We often pride ourselves on finding those opportunities that others may otherwise overlook and then get involved and apply our active asset management to turn those buildings around. "We're also fairly selective," says Rudd. 

"We look at plenty of opportunities throughout the year, but there might only be one that we transact on. And there's a lot of work that goes into the opportunities that we do look at, but again, it takes a fairly special opportunity for us to proceed with it."

The opportunity

According to Rudd, Perth's industrial property sector is benefiting from a unique confluence of tailwinds that have made it one of the country's most compelling property opportunities. 

"We've had growing and pent up demand from the likes of e-commerce, logistics, warehouse, and manufacturing tenants, but we've had really limited new supply."

Part of that conviction is that Realside has introduced stability and certainty into the fund's income outlook.

"The portfolio is underpinned by long-term leases to a strong and diversified portfolio of tenants," says Rudd. "We refer to what's called a weighted average lease expiring (WALE), which means the average length of the lease is nine years and the fund term is five years. So we have a fairly clear view on the income that's coming into the fund over the next five years, and that's included in our assumptions."

"We're also targeting a seven and a half per cent annual cash distribution, again, because we have that line of sight on the leases that we have in place and because the portfolio is 100% leased and 100% developed, that gives us conviction, but also contributing to that total return."

That level of conviction and stability is how the fund is able to target aggressive returns.

"We're targeting 14 and a half percent target total return, which is very unique for a portfolio that doesn't have any releasing risk and doesn't have any development risk."