MDO Property will invariably utilise unit trust structures to purchase property – we try to keep things simple. Usually one property per Unit Trust, and always one asset class per Trust. We will identify opportunities, then investigate them thoroughly in their own right and as an opportunity cost analysis against other opportunities; we seek to negotiate suitable terms for acquisition; we retain as much ownership as is prudent in order to manage debt and cash flow risk; and we invite investor partners to participate in ownership of the asset, on terms negotiated specifically for each asset and each investor or investor group.
We’re generally happy to leave vendors in as unit holders in the purchasing Trust, and to negotiate suitable progressive buy-outs of their balance equity. If necessary MDO and its principal will guarantee debt, although our preference is to move as quickly as possible (and immediately if possible) to relatively low levels of non-recourse debt.
We are very rarely looking at short term (sub 10 year) ownership. We prefer to hold assets for the very long term. The most significant downsides of property are (a) its illiquid nature, and (b) the significant entry and exit costs. We ignore the first by maintaining a strategy of long term asset retention, and we greatly reduce the impact of the second by amortising these costs over longer terms.
We charge management fees for managing the trust and the asset, both of which are (and will remain) below normal market rates.
We partner with good people we like, and who like us and consider us good people. In a long term business relationship, there is no other way. We’re committed to ensuring investors enjoy a regular income stream, and the opportunity for long term capital growth. We treat investor funds more seriously than our own, and we treat ours very seriously. Please note we only partner with sophisticated or institutional investors.
You’re most welcome to discuss the off-market sale of your property into an MDO Unit Trust, or your partnering with MDO in property investments in Australia or overseas.