Property syndicates offer compelling yields and passive income, but carry specific risks investors must understand before committing capital.

1. Illiquidity

Syndicate units cannot be easily sold. Most have a fixed term of 5-10 years with no secondary market. Never invest money in a syndicate that you may need at short notice.

2. Concentration Risk

A syndicate owns one building. If it becomes vacant, income stops. A diversified property fund is lower risk on this dimension.

3. Manager Risk

The responsible entity makes all decisions. Always check the manager’s AFSL, track record and fee structure before investing.

4. Leverage Risk

Many syndicates use debt (typically 40-60% LVR). If property values decline and the LVR covenant is breached, the lender may force a sale at an unfavourable time.

5. Tenant Default Risk

Commercial tenants can fail, vacate or renegotiate lower rents. Check the tenant’s credit rating, lease term and WALE in the PDS.

How to Evaluate a Syndicate

• Read the full PDS — understand fees, risks and exit mechanisms
• Check the responsible entity’s AFSL on ASIC’s register
• Review the manager’s track record on previous syndicates
• Assess the tenant’s credit quality and lease term
• Understand the debt structure — LVR, interest rate, loan maturity
• Get independent financial advice before investing

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