The Blacksmith Property Fund has failed to inspire investors and the $25 million prospectus has been pulled from the market.But the Blacksmith directors say they will take view of investors and commentators into account and reshape elements of the offer w
The Blacksmith Property Fund has failed to inspire investors and the $25 million prospectus has been pulled from the market.
But the Blacksmith directors say they will take view of investors and commentators into account and reshape elements of the offer with a view to re-launching it soon.
The prospectus was launched in February with the intention of targeting distressed commercial property – vacant properties and those where rollover financing is unlikely.
The offer forecast annual pre-tax return of more than 12%.
However, various commentators criticised the fees, lack of clarity about debt gearing, asset disposal and investor returns, director’s contributions, and uncertainty about proposed property tax changes.
The directors and promoters are all businessmen with experience in the property sector – Peter Wall formerly with AmTrust Pacific and Brookfield Multiplex, property syndicator Bryce Barnett of KCL Property, and Jack Porus of lawyers Glaister Ennor.
“As directors, we attempted to structure the fund to ensure investors' rights were protected and to achieve the correct balance between commercial risk, return on investment and manager’s remuneration. While our market testing before launch indicated we had achieved that balance, it is apparent that the market view of externally managed funds has changed and proposed tax changes have moved the point of equilibrium so that ultimately we missed the mark.”
Blacksmith has planned to seek properties valued between $5 million to $15 million and promoted through the distribution networks of KCL.
Investors would have paid an application fee of 2.75% of the total amount they subscribe.
The fund management fee included a property management fee of 5% of the rental income; an acquisition fee of 1% of the purchase price of a property; a performance fee payable not before June 30, 2013 and only if shareholders first receive an annualised pre tax internal rate of return in excess of 12% a year.
