INVESTMENT POLICY
Investment Concept
The investment concept behind the incorporation and share market listing of the BBX Property Fund ("BBXP") is to capitalise on the excess stock of new, quality residential and holiday accommodation available on the East Coast of Australia and in New Zealand.
This situation has been brought about by 'boom' time conditions over the last 2 - 3 years leading to a large number of projects completed or committed and under construction for which there presently are no buyers. Individual investors have gone out of the market having been scared by a loss of capital in respect of earlier investments or hearing of others who have had that experience.
The combination of excess supply and utilisation of BBX trade currency to transact a minimum of 30% of the acquisition cost of qualifying properties is a powerful means of building a blue chip portfolio of quality properties with the objective of long term wealth creation
A successful capital raising has placed BBXP in a unique position to capitalise on these existing and still emerging opportunities. As the market moves inevitably from a cyclical low point due to over supply, it is expected yields, already firming in the Sydney market, will lead to stabilising and then rising capital values. At this time individual investors would be expected to re-enter the market and return to buying with confidence that they will not experience a loss of capital. This process is likely to unfold over the next 18 - 24 months.
Investment Strategy
Actively managing a portfolio of diversified quality real property assets generating relatively stable rental flows, and longer-term capital appreciation.
In managing and extracting value from the portfolio, the Company will focus on:
- Active asset and property management to maximise operating efficiencies and hence, returns;
- Regular review of the investment portfolio in line with return and capital appreciation objectives;
- Prudent development of assets where deemed appropriate to enhance longer term investment performance and yield;
- Managing risk through the application of sound investment principles, consistently applied.
The Company will apply appropriate investment and risk management strategies, including:
- Application of and adherence to a consistent investment discipline in assessing acquisitions and disposals;
- Focusing on investments in assets that produce secure, stable cash flows;
- Maintaining an appropriate balance between core portfolio and enhanced opportunities across geographical markets;
- The appropriate use of debt, structured to match the expected holding period of assets and income flows from the assets;
- Ensuring the application of appropriate interest rate hedging policies to protect earnings and minimise volatility in interest costs.
