News & Opinion

PMGs Diversification Strategy

28 July 2017

PMGs Diversification Strategy

 

Over the last two years PMG has been through some exciting and significant changes to improve the value we bring to the funds and properties we manage.

The total focus of these changes has been to grow the value of our clients’ investments, while ensuring we respond effectively and proactively to changing market and regulatory conditions.

Below is a brief recap of our journey as a management company and the changes we’ve implemented over the past two years.

2015
• Daniel Lem joined PMG as Director & Head of Investment bringing a number of properties to PMG’s portfolios, as well as his skills in asset acquisition and project management.

2016
• PMG invests further in technology and systems to improve efficiency and manage increasing compliance requirements and costs.
• Nigel Lowe joined PMG as Chief Financial Officer to strengthen PMG’s in-house finance team.
• Single-property syndications transitioned into Fund structure.
• Largest single capital raise achieved by PMG - $45m.
• PMG became licensed as a manager of Managed Investment Schemes by the Financial Markets Authority (FMA)* – one of only a handful of New Zealand companies to do so.

What does our journey look like going forward?
In 2017 PMG’s investment strategy remains the same: To deliver long term sustainability and value growth for investors through proactive management and portfolio diversification.

Given global economic uncertainty, volatility and a continually changing geopolitical landscape, focusing on greater diversification is now essential in managing investment risk.

Our strategy to achieve greater diversification is to create a range of sector or segment specific property investment portfolios. Within each investment portfolio we acquire multiple quality properties offering a diversity of buildings and tenants, which creates a robust investment vehicle offering greater economies of scale, more reliable cashflows and improved liquidity.

Over recent years the cost of property acquisitions has increased due to increasing compliance, due diligence and capital raise costs. This is consistent with our peers in the industry. PMG’s strategy to establish and grow a portfolio of sector or industry specific investment funds, using economies of scale to acquire larger assets, or multiple assets together, results in keeping overall establishment costs down, and therefore improves value for investors.

PMG’s innovative selection of property portfolios caters for the differing needs of investors, providing greater choice, value and reduced risk through improved liquidity, diversification and sustainable income over time.

What does this mean for existing PMG managed investment portfolios?
For PMG’s diversified fund (Pacific Property Fund Limited), our strategy is to grow its market value to around $250m through acquiring quality properties over time, whilst maintaining a sustainable return and achieving growth in value. Our research shows that this size will provide the best relative and sustainable return to investors, as well as reduced risk and improved liquidity.

To date the year-on-year performance of Pacific Property has consistently exceeded expectations, and we are optimistic about delivering increased and sustainable returns as we continue to grow our asset base.

For PMG Direct Office Fund, our aim is to grow the Fund’s market value to around $250m also, a value which will provide the optimum number of investors and level of
autonomy within the fund.

Finally, this month’s launch of PMG Direct Childcare Fund is an exciting new offering by PMG, which provides investors with an alternative investment choice, with secure and competitive long-term returns, as well as the chance to participate in the future of New Zealanders – a cause we know many of our investors are passionate about.

PMG Capital Fund is a property, private equity fund established to create value through shorter term transactions and facilitate the acquisition of quality properties into our investment funds to hold for the long term. With a transparent and defined exit strategy, the creation of PMG Capital Fund represents a win-win scenario for PMG’s investors.

In summary
As a management team, PMG is 100% committed to ensuring investors achieve their investment goals and believe our strategy, in-house property and funds management team, and investment portfolios will continue to deliver on these goals.

We operate an open-door policy to all our investors and encourage you all to comeand see us or pick up the phone and tell us about your investment objectives. It’s our mission to create value for people in property, through strategic investment and build lasting relationships you can trust. I look forward to hearing from you.

Scott McKenzie
Chief Executive Officer & Director

 

*Property Managers Limited is licensed under the Financial Markets Conduct Act 2013 to manage Managed Investment Schemes (excluding managed funds) (‘schemes’) which invest in, or own, real property in New Zealand.