Indigenous Business Australia (IBA) has created a $70 million Indigenous Real Estate Investment Trust that it hopes will double in size in three years as Aboriginal and Torres Strait Island communities use some of their estimated $10 billion to $40 billion in funds to co-invest in the REIT.
The commercial units of land councils and Aboriginal and Torres Strait Island community organisations will be able to invest a minimum of $500,000 to take stakes in the REIT. The investment returns will be shared equally between the IBA and its indigenous shareholders. The IBA is waving performance fees in relation to the REIT.
The net annual return target for the REIT is 8 per cent and it will use no leverage when it buys property.
“We want to have a geographic spread of risk and assets that will provide good long-term returns,” Chris Fry, IBA’s chief executive, told DataRoom.
IBA has injected an initial set of assets into the REIT, including commercial buildings in regional centers in the Australian Capital Territory, the Northern Territory, Western Australia and Queensland.
Minter Ellison Lawyers’ Stuart Johnson was the sole legal counsel to the IBA in setting up the REIT. CBRE Australia is providing advice to the IBA on potential investments.
Fry says Aboriginal and Torres Strait Islander communities have as much as $40 billion in funds, mostly invested in term deposits or in cash.