URB’s Investment Strategy is to create an actively managed portfolio of Equity Assets and Direct Property Assets. These assets will all have exposure to urban renewal and regeneration.
The equity component of the Investment Portfolio will comprise a diversified collection of Equity Assets that seek to capitalise on exposure to urban renewal and regeneration. URB’s Equity Portfolio will seek to complement more mainstream equity portfolios as URB does not intend to hold banking or resource stocks. URB will have a flexible investment mandate, across various industries and will seek to offer investors exposure to quality companies that are thought to benefit from urban renewal and regeneration.
Urban Renewal Universe
The Investment Manager believes that the Urban Renewal Universe is made up of 89 stocks (from the ASX All Ordinaries Index of 500 stocks as at 31 January 2017) (the Urban Renewal Universe). The Urban Renewal Universe is not an official index but is rather a universe of Australian equities that the Investment Manager considers to have exposure to urban renewal and regeneration and that falls within the Company’s Investment Strategy. Equity Assets that the Investment Manager considers comprise the Urban Renewal Universe will vary from time to time. The Urban Renewal Universe, when weighted based on market capitalisation, represents approximately 20.5% of the ASX All Ordinaries Index as at 31 January 2017.
Below is an illustrative representation of a potential Equity Portfolio of URB which is made up of 30 stocks and is shown on a sector exposure basis. The Investment Manager believes that this portfolio should have a low correlation to a typical investor portfolio.
In relation to the Property Portfolio, URB will target Direct Property Assets that are set to benefit from changes in use, such as rezoning, gentrification and the maximisation of available floor space in order to enhance returns. Targeted properties will be undervalued assets which:
- require a short term repositioning for income; or
- require capital for restructuring; or
- have an underlying opportunity for capital revaluation through changes in use.
Investment will be made as close to the point of change as possible and, should there be a delay in such changes, the objective will be that the asset is underpinned by a sustainable and often growing income stream. URB’s strategy in relation to Direct Property Assets is to provide an opportunity for investors to gain exposure to assets traditionally only available to a select few. Investments by URB in Direct Property Assets are expected to be made alongside Soul Pattinson, one of Australia’s oldest and respected investment houses.
URB will target Direct Property Assets which will have strong underlying investment fundamentals which may include:
- sustainable income;
- location benefits;
- beneficiaries of significant Government infrastructure investment; and
- opportunity for uplift in value from re-zoning and/or increased use and density.