Property Trusts Australia: REITs, A-REITs, and Property Funds Explained

Property trusts are one of the most accessible ways to gain exposure to commercial and residential real estate without directly buying properties. In Australia, listed property trusts — known as A-REITs (Australian Real Estate Investment Trusts) — are traded on the ASX and enable investors to access large portfolios including office towers, shopping centres, and industrial warehouses.

This guide covers how property trusts work in Australia, the types of property funds available, and how they compare to direct property investment.

What Are Property Trusts in Australia?

A property investment trust is a managed fund that pools capital from investors to buy and manage a portfolio of properties. The trust owns income-producing properties and pays returns from rent received.

In Australia, property trusts are structured as listed (traded on the ASX) or unlisted (managed by a fund manager). Both types are overseen by a responsible entity that manages the trust's property assets.

Australian Real Estate Investment Trusts (A-REITs)

Real estate investment trusts (REITs) are a global asset class that enables investors to buy units in a trust that owns income-producing properties. A-REITs are the Australian real estate investment trust type, included in the S&P/ASX 200 index.

Major A-REITs include Goodman Group (ASX: GMG — industrial and logistics), Scentre Group (ASX: SCG — Westfield shopping centres), Stockland (ASX: SGP — diversified), and Dexus (ASX: DXS — office).

The key benefit of real estate investment trusts is liquidity. You can buy shares on the ASX with no stamp duty — property investors gain exposure to value and returns with the security and flexibility of share investing.

Types of Property Funds

Listed Property Trusts

Listed property trusts are traded on the ASX like shares, offering liquidity, diversification across properties, management, and income paid to investors.

A-REITs are classified by the type of properties included:

• Office A-REITs — own commercial office buildings in CBD and suburban locations

• Retail A-REITs — own shopping centres and retail properties

• Industrial A-REITs — own warehouses, logistics, and industrial properties

• Diversified A-REITs — hold a mix of commercial, industrial, and residential properties

Check the full list on the ASX website.

Unlisted Property Funds

Unlisted property funds are managed by a fund manager who raises capital and invests in specific properties. These funds offer potentially higher returns (less public market volatility) and direct exposure to specific properties, but with longer investment horizons.

Your initial capital invested may be locked in for the fund term. Read the product disclosure statement and check terms before investing.

Commercial Property Trusts and Syndicates

Property syndicates are a type of unlisted fund where investors pool money to buy a single commercial property. Each investor owns a share of the underlying assets and receives regular rental income. Commercial property trusts enable investors to access larger properties that individuals could not afford to buy.

How Property Trusts Generate Returns

Property trusts generate returns through income distributions (rent paid to investors) and growth (rising value of properties included in the fund, reflected in the unit price).

Historically, A-REITs have delivered total return of 8-10% per annum over the long term, though past performance does not guarantee future results. Returns vary by sector, interest rates, and market characteristics.

Listed Property Funds vs Direct Property Investment

Advantages of Property Trusts

Property trusts offer lower entry costs — investing via a stockbroker with a few hundred dollars. They provide portfolio diversification across properties included in the fund. You receive distributions and can sell units on the ASX. Fund managers handle management.

Advantages of Direct Property Investment

Direct investing in properties offers leverage — banks lend 80-90% of value, amplifying return on initial capital invested. You claim deductions through negative gearing and depreciation. Investment properties in the right location deliver growth that outperforms the market. See our property investment strategies guide.

Many investors hold both A-REITs and direct properties to gain exposure to diverse assets while maintaining tax and interest deduction benefits.

Capital Gain and Tax Treatment

A-REIT distributions are a mix of rental revenue, capital gain, and tax-deferred amounts. Tax-deferred amounts reduce your cost base, deferring gains tax until you sell units. Units held over 12 months qualify for the 50% CGT discount — use our Capital Gains Tax Calculator.

Consult a licensed financial adviser for specific advice. Find guidance on ASIC MoneySmart.

Risks of Investing in Property Trusts

Market volatility means A-REITs are subject to share market movements — unit prices can fall even if properties included in the fund perform well. Interest rate risk means rising rates increase debt costs and reduce the value of properties.

Sector risk means downturns in office or retail impact commercial trusts. Liquidity risk applies to funds that restrict withdrawals. Check debt, security features, and gearing before investing.

Product Disclosure Statement and Fees

Before investing in any fund, review the product disclosure statement (PDS). It includes the investment strategy, fees, risk, and the responsible entity. For listed trusts, check ASX valuations to find whether the trust is traded at a premium or discount to the value of its net assets.

Fees of 0.5-1.5% are common for A-REITs, while unlisted funds charge higher fees paid from income. These costs reduce your return.

Portfolio Diversification with Industrial Property and Commercial Assets

Property trusts enable investors to build a diversified portfolio across commercial, industrial, and residential properties. A single A-REIT may own dozens of properties across Australia — this means investors access industrial property and commercial office buildings otherwise inaccessible. Properties included in these funds offer return characteristics that smooth risk across your portfolio.

Getting Started

Investing in A-REITs means opening an account with a stockbroker and buying units on the ASX. You receive distributions paid from the fund whenever the market is open.

For investors who own properties directly, PropBoss provides features and tools to manage investment properties — from tracking rent to monitoring portfolio value and security.

Frequently Asked Questions

Are property trusts a good investment?

A-REITs can be a strong component of a diversified investment portfolio, delivering income and long-term capital growth. Speak with a licensed financial adviser before making decisions.

Can I withdraw from unlisted property trusts?

Withdrawals are restricted to redemption windows. Some funds suspend withdrawals during market stress. Check the product disclosure statement for the security and terms of your investment.

How is A-REIT income taxed?

Income includes rental, capital gain, and tax-deferred components. Units held over 12 months may qualify for the 50% CGT discount.

What is the difference between listed and unlisted property trusts?

Listed trusts are traded on the ASX with daily liquidity. Unlisted trusts offer more stable valuations but restrict withdrawals and have longer investment horizons.

Listed property trusts, also known as Real Estate Investment Trusts (REITs), are traded on public stock exchanges like the Australian Securities Exchange (ASX), allowing for greater liquidity compared to unlisted property trusts.

Unlisted property trusts typically have fixed investment terms and may impose limited withdrawal periods, making them less liquid than their listed counterparts, which can be traded daily on the stock exchange.

The minimum investment required for unlisted property trusts is generally higher than for listed trusts, often ranging from $10,000 to $250,000, while listed trusts can be accessed with smaller amounts, sometimes as low as $500.

A trustee holds the property on behalf of unitholders (investors) in property trusts.

Listed Property Trusts (LPT), also known as Real Estate Investment Trusts (REITs), are traded on the stock exchange and their unit prices are influenced by the perceived value of the properties they own and stock market movements.

Unlisted Property Trusts (UPT) raise funds to buy or develop specific real estate and typically close to new investments once sufficient funds are raised, with units traded through the trust managers rather than on a stock exchange.

Property Securities Trusts (PST) are a type of unlisted trust that pools investors' money to invest in listed property-related securities, offering potential income and growth linked to stock market fluctuations.

Losses incurred by property trusts are 'trapped' within the trust and cannot be used to reduce personal income tax.

Properties held in trust may be shielded from personal creditors or legal claims, providing asset protection.

Unlisted property trusts may have limited liquidity, making it difficult for investors to withdraw their funds quickly, as they are not traded on public exchanges.

Investors in property trusts receive income distributions, which are typically paid out regularly, and may also benefit from capital gains if the value of the properties increases over time.

The structure of property trusts allows for smoother intergenerational wealth transfer compared to personal ownership.

Trusts are ideal for providing access to commercial property with less capital and professional management.

Income can be distributed to beneficiaries of property trusts at lower marginal tax rates, leading to tax efficiency.

Property trusts often provide regular income distributions to investors, which can be appealing for those seeking consistent cash flow from their investments.

The Australian property market is fragmented, with varying performance across residential and commercial sectors.

Private trusts can involve high initial legal fees and ongoing compliance costs, which may make them less effective for small investments.