Macquarie first bank to offer geared residential property investment to self managed super funds

20 February 2008

Macquarie Bank today unveiled its new geared residential property product for self-managed superannuation funds (SMSF), Macquarie Property Lever.

“Macquarie is the first bank to release a product designed to take advantage of recent changes to superannuation legislation that allow regulated superannuation funds to borrow to invest in limited circumstances, and subject to the diversification and risk management strategy of the fund,” said Dean Firth, Executive Director, Macquarie Relationship Banking.

“Macquarie Property Lever allows SMSFs to acquire an interest in residential property in the same way that an investor would purchase residential property. We have deliberately structured the product to replicate many of the processes that property investors are already familiar with.

“Property Lever offers peace of mind through the limited recourse nature of the loan, therefore protecting the other assets of the SMSF. Investors should be comforted that Property Lever is structured in a way which can enable them to comply with the Superannuation Industry (Supervision) Act (1993) , and we are now seeking formal acknowledgement from the ATO,” continued Mr Firth.

“The investor also has the added comfort that both the product and the funding of the loan comes from one source – Macquarie Bank.”

David Shirlow, Executive Director with Macquarie Adviser Services, said: “Recent legislative developments have provided the scope for super funds to borrow not only to invest in listed securities but also into other asset classes such as real property. Whilst traditional instalment warrant arrangements have facilitated structured equity investments for many years, the emergence of products such as Property Lever marks a new era in structured superannuation investments.”

Macquarie will fund up to 55 per cent of the purchase price.

Mr Firth continued: “This loan to value ratio reflects the conservative nature of superannuation – these are people’s nest eggs and ultimately their retirement savings, after all.”

Macquarie Property Lever will be sold through financial advisers as well as directly by Macquarie Bank.

“Despite being known as ‘do-it-yourself’ super, most people want advice on their self-managed superannuation. Macquarie Property Lever will provide a great opportunity for financial advisers to create a link between themselves and direct property investment. Residential property is a huge asset class that traditionally offered little scope for advice,” said Mr Firth.

Macquarie Property Lever summary:

• Residential property of the SMSF’s choice (subject to broad criteria)
• Borrow up to 55 per cent of the agreed property value
• On settlement of the purchase, the property is held on trust for the SMSF by a security trustee
• Loan is for 9.5 years while a property manager appointed by Macquarie takes care of the property
• Right from the start the self-managed super fund receives all the net rental income from the property, benefits from potential capital growth plus any potential tax benefits from the investment
• No extra fees at the end when the completion payment is made if the loan goes full term
• Comprehensive insurance including rental income protection if the property is not tenanted for an extended period of time

For further information, please contact:

Bethany Poore
Senior Communications Manager
Macquarie Relationship Banking
Tel: (61 2) 8232 3276
Mobile: (61) 407 576 501
Email: bethany.poore@macquarie.com

 

This information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL 237502 (“Macquarie”) for general information purposes only, and does not take into account any potential investors’ objectives, financial situation or needs. Before acting on this general advice, investors must consider its appropriateness having regard to your own objectives, financial situation and needs. Investors should consider the Product Disclosure Statement (PDS) before making any decision about whether to acquire or continue to hold an investment in Macquarie Property Lever. A copy of the PDS is available from Level 22, 20 Bond Street, Sydney or by phoning 1800 229 848.

All potential investors should obtain independent financial, legal and taxation advice and consider all risks before making any decision about investing.In addition, before investing, superannuation fund trustees should obtain their own advice as to whether this investment is permitted by superannuation laws, allowable with regard to their SMSF investment strategy and otherwise appropriate for their fund. Diversification of your SMSF investment portfolio can be used as part of your overall portfolio risk management strategy. By diversifying your investment portfolio, you may reduce your exposure to failure or underperformance of any one investment, manager or asset class.

Trustees take full and sole responsibility for their investment in the Macquarie Property Lever and any changes in superannuation laws and administrative practices during the term of that investment. Before investing, trustees should ensure that sufficient cash flow is available to meet interest and any other associated costs during the term of the Macquarie Property Lever.

© 2008 Macquarie Bank Limited ABN 46 008 583 542