Democratisation of global private markets | Spire US Multifamily Growth & Income Fund (AUD) awarded ‘Recommended’ by Zenith

Spire Capital ("Spire") has been proudly ‘democratising’ global private markets for Australian private investors for over a decade. This means offering clients and their advisors the opportunity to invest in private equity/VC, private real estate, private infrastructure, distressed debt and impact investments alongside institutional investors via local?feeder funds that have been?optimised?(tax structuring, cost, administration and reporting) for Australian investors. As at 30 November, 2021, Spire?has committed AUD 1.75bn+ into private markets on behalf of private clients.?With as little as AUD 20,000 (underlying investments are normally USD10m minimum), direct investors can complement traditional asset class exposures like listed equities/property and bonds with allocations to global private markets. This minimum is even lower for investors using administration platforms. The lack of access to private market investments for private investors continues to be a topical issue in?Australia, see?Spire's response?to recent AFR article featuring Peter Costello, Chair of Future Fund. Spire is proud to be contributing to the discussion while offering Australian private investors access to the world's?very best investment managers.

Announcement

The recently launched?Spire Multifamily Growth and Income Fund (“Spire Fund”)?(APIR ETL4846AU), has been awarded a “Recommended” rating from Zenith Investment Partners - Media Release available here.

Building on 11 years of experience investing in US multifamily real estate, Spire Capital has launched the Spire Fund to enable local investors to access the largest and most liquid commercial real estate sector in the US in an open-ended fund structure with a monthly-liquidity feature, AUD currency hedging and Product Disclosure Statement (PDS). Following a multi-decade period of strong returns, US multifamily real estate remains highly attractive due to a structural undersupply of affordable apartments and secular demand trends supporting rentership in the US.

Zenith’s Product Assessment shared a favorable view on the US Multifamily sector:

“As a well-developed institutional asset within the US, multifamily apartments offer investors a set of unique characteristics, which are not typically available when investing in Australian direct real estate…US multifamily apartments are known for having stable demand (relative to more cyclical sectors such as office and retail) and steady rental growth. While the terms of the lease are typically short (i.e., 12 months), each asset's leases will be diversified across hundreds of tenants and the average length of tenancy will be significantly higher providing assets with a more stable occupancy profile. With these factors combined, US multifamily is characterised as having defensive returns relative to more cyclical property types.“

The Spire Fund?accesses US multifamily apartments through a strategic relationship with Cortland. Cortland is a high-quality US Multifamily real estate specialist with USD 13.5bn in assets under management (AUM) across 65,000 apartments and 100,000+ residents (8th?largest operator in the US). The Spire Fund is?customised?for Australian investors (tax, currency, platform access) and feeds into a mature portfolio of core-plus properties (47 apartment communities/USD 2.24bn AUM) to invest alongside 20+ US pension funds seeking 8-12%+ returns with low volatility, low correlation and inflation protection.

“Zenith has a favourable view of Cortland's investment process, believing it possesses multiple return drivers both at the asset level in rental yield and value creation opportunities but also in asset and market selection.”

The strategy is focussed on high-growth cities (e.g., Atlanta, Orlando, Dallas, Houston, Charlotte, Raleigh-Durham, Denver) and specifically targets garden-style apartment communities located in suburban settings. Cortland place the tenant at the centre of all activities (see video content supporting the ‘resident experience’?here) to deliver outstanding accommodation, amenities and services at an affordable price (i.e., tenant’s rent to income ratio is typically 20%). In addition to making operational improvement to the apartment communities, Cortland also draws on scale and a vertically integrated business model to improve and renovate the physical real estate. This approach has delivered strong risk-adjusted returns owing to stable occupancy and outsized rental growth (Cortland delivered 4 positive quarters through CY 2020 while public real estate markets dropped by 40%+ impacted by COVID and market sentiment). As a result, the Spire Fund is being supported by investors seeking a defensive alternative or a bond-like income coupon with Net Operating Income growth through active value creation.

“Zenith believes Cortland's ability to add value, independent of the investment cycle through operational improvements and asset improvement is an attractive feature of the Fund…Zenith believes the Fund could be used to reduce volatility and provide diversification within an investor's growth-orientated allocation, whilst also providing attractive returns.”

The outlook for US Multifamily remains attractive with strong rent growth across the sector. Cortland’s target markets continue to outpace the broader apartment sector as high-growth cities (e.g Atlanta) continue to attract new residents seeking job opportunities, more space, warmer weather and a lower cost of living.

The Spire Fund is available on leading platforms including BT Panorama, Netwealth and Macquarie Wrap or can be accessed directly with AUD 20,000.

?“To date, access to US Multifamily real estate has only been via closed-end funds, we have listened to the demands of our clients and are proud to be offering an evergreen fund with monthly liquidity feature via PDS.?This aligns with local platform requirements and enables inclusion of a compelling ‘defensive alternative’ in managed accounts”?- Stuart Haigh (Director, Spire Capital)

For further information, please reach out at any stage