The Centuria Fund is too small at present. This creates difficulties with effective implementation and runs the risk of being shut down if it doesn't get to scale over the longer term.
AU Diversified has too higher a gearing for the assets that it has. I'd prefer to see it below well below 40%. They also have had some changes in around management that I don't see as optimal.
The biggest issue for all unlisted property funds at the moment is that yields are currently at levels never before seen in this country (refer to cap rates chart below), and prices are being driven by the weight of money in the market chasing yield assets rather than robust real estate fundamentals. In and of itself, that's not too bad, but you do not want to be over-levered to the cycle when it ultimately turns. For that reason, if I had to invest in an unlisted property fund right now from that list, I'd probably go with the AMP wholesale Australian property fund as it has no core leverage.
There is already evidence that weaker commercial property assets are starting to see yields rise (a.k.a. values fall). If long bonds start to appreciably rise, property prices will come under pressure in the absence of robust increases in effective rents.
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