(Townhouse Project of 200 Units that we purchased and exited with ROIC 22% P.A, total net return 67%, '20-'22)
I managed a portfolio of property management assets in Queensland spanning 1,000+ apartments / townhouses across single buidlings, townhouse estates, heritage buildings and also short stay accommodation projects in Gold Coast. This asset class is a relatively hidden asset class with great stable cash flows and is called management rights in Queensland, Australia.
Management rights grants the buyer the right to provide caretaking and leasing services to entities within a Community Titles Scheme, whether it be a set of townhouses, a shopping square, a building apartment, a resort or a student accomodation. In Queensland, management rights fall under the BCCM Act (The Body Corporate and Community Management Act 1997). The legislation gives this industry / business a moat unlike any other in the world.
Queensland management rights law came into effect in the 1970s whereby some developers decided to package the “rights” to manage their developed apartments, and sell it at a multiple to the projected body corporate levies and letting income as a business. Soon following thereafter, legislation slowly came into effect and grew into what it is today, a multi-billion-dollar industry.
Given that the service provider performs their contractual obligations as agreed in the scheduled set under the caretaking and letting agreements on purchase, Queensland legislation protects the investor of these rights with a guaranteed income stream (which is the body corporate monthly salary, or in overseas terms, the building management fee) within a set term agreed within the contractual agreement between buyer and seller. The agreements are protected under the BCCM Act and the term of tenure usually range from 18-25 years, with the opportunity to top up the agreements back to the maximum term of 25 years, with each top up in 5 year blocks (via annual vote).
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