Ethical property Commercial Fund (the Fund) is an Australian domiciled unit trust and a managed investment scheme that is not registered with ASIC under the Corporations Act. The Fund was established in 2015 by Ethical Property Australia (EPA), with the three founding Investors being donkey wheel Charitable Trust, donkey wheel Foundation and Graeme Wood Foundation.
EPA is a social enterprise that is part of an international Ethical Property network founded in the UK in 1998. It believes that purpose drives its profits and adheres to a set of ethical principles that generates both financial returns and social impact. Currently, the network has 35 sites internationally, with 4 in Australia.
The Fund directly owns three property assets across Melbourne and the ACT, the Donkey Wheelhouse, the Endeavour House, and the Spark Space. In addition, the Fund has a 20-year lease on a commercial property in Melbourne. In total, they provide tenants over 10,500 SQM of commercial space.
The Fund is only offered to wholesale clients and is an open-ended fund that invests in property projects that deliver social and environmental impact, as well as financial returns.
The Trustee has appointed Ethical Property Australia Pty Ltd (EPA) (the Fund Manager) as the fund manager under an investment management agreement which delegates the day-to-day investment management of the Fund to the Fund Manager.
The Fund’s Mission is to enable exclusive property investments to become inclusive neighbourhood assets for the community:
The Fund’s key objectives are:
- Generate consistent income and target a Yield of 5%+
The primary ﬁnancial return objective is to make distributions to Investor’s equivalent to a Yield of 5%+ against the NAV of the Fund through regular income streams from leased property assets.
- Target an ongoing IRR of 9%+
Through asset upgrades, environmental improvements, and market optimisation there is potential to increase rental income and so improve the value of the assets and the unit price over the long term.
- Create assets of value to the community in which they are located.
EPA aims to generate demand for each asset from new users, new tenants, and new Investors by ensuring the asset delivers against both the needs of the community working or living in the property, but ensuring it also links to the broader community around the property.
- Leverage assets to underpin community development and sustain demand.
By focussing on the users, tenants and local community needs, EPA will deliver community development programs designed to activate and leverage the asset for those who work or live there, to ensure demand for projects is sustained.
- Contribute to the collective effort of the global community to achieve the relevant United Nations Sustainable Development Goals.
EPA will plan and manage the Fund’s assets to directly or indirectly impact on the creation of career and business opportunities, safe and affordable housing and building resilient and thriving local communities and economies that are both participatory and inclusive in nature.
The Fund’s investment strategy
EPA’s long-term approach is aimed at growing the Fund to $200 million in NAV by the end of 2030. This will provide momentum for the Fund to become one of Australia’s leading impact investment opportunities for Investors seeking to generate both an economic and social yield from their investment portfolio.
The Fund objectives will be achieved through completing the investment plans for the existing Fund assets to realise their full Yield potential, and acquiring, improving, and holding new assets to generate long-term rental income, together with the potential for capital growth over the long term. Furthermore, New acquisitions may also generate loan interest income during the refurbishment or construction period.