Developer and property investment advice firm OpenCorp launched its crowdsourcing platform, the Open Access fund in mid-March, and has already raised $10.5m in equity in under six weeks from individual and self-managed superannuation fund (SMSF) investors.
Once people are invested in the fund they are issued cash units, while the money held in those units is directed to low risk assets such as 30-day term deposits which deliver investors returns of around 2% to 2.5%.
While those returns are modest, fund members are offered first right of refusal to participate in OpenCorp development projects, such as a recently announced $40m boutique apartment development in Melbourne’s Hawthorn East.
“If somebody’s in the Access Fund and holding cash units, we then present them with project opportunities,” OpenCorp Director Matthew Lewison said.
“Somebody might have $100,000 in cash units and see the Hawthorn East project and they might put 50% of their units towards it,” Lewison said.
“That would leave the other 50% in cash units and then when the next project comes along they might put half of what they’ve got left in that.”
“As returns come back from projects your money is reinvested back into the cash units and you can redeem your cash units at any time at no cost.”
OpenCorp predict the Hawthorne East project will deliver investors a 50% return on equity over the next two and a half years.
The Hawthorne East project is the second opportunity offered to Access Fund members after OpenCorp raised $6.5m in three weeks for a six-storey apartment development in the Brisbane suburb of Albion.
Lewison said the level of interest in the Hawthorne East project had exceeded what OpenCorp had expected and he believes the future projects and the fund in general will continue to grow in popularity.
“We’re definitely seeing Australians wanting to control particularly their super and investment decisions and know where their money is being invested, rather than just handing their money to a big corporation and have somebody in back office deicide where it’s going to be invested.
“Seventy-five per cent of investors in our fund are SMSF operators and with 25,000 new SMSF being set up each year, which has been a consistent trend for the last seven or eight years, it’s clear that Australians want to take control of their own future.
“Therefore being able to provide investment opportunities that don’t require a huge deposit to get into, our fund requires has a $10,000 entry point, is something that’s going to be popular. They don’t need to save up for 10 year to get into the asset class and get exposure to property.”
Lewison said the particulars of the Hawthorne project also likely contributed to its popularity.
“Hawthorn East is the third most expensive suburb from a median price perspective in Melbourne. It’s in council area called Booroondara, which is about six kilometres east of the city and has four of the five most expensive suburbs in Melbourne within it.
“Hawthorn East is right in that very, very hotspot of expensive, highly sought after property. So to be able to deliver a project that will be providing apartments targeted at the owner-occupier market is something that really appealed to our investors.”
The popularity of the first two Open Access Fund projects has already seen OpenCorp decide on their next offering.
“We’ve got a project in Queensland that we had earmarked for a joint venture with an existing JV partner and because of the demand we’re seeing in the fund with the Albion and Hawthorn East projects we wanted to provide another opportunity for fund members,” Lewison said.
“We’ve reserved an allocation in that project to provide an opportunity for the retail and mum and dad investors to participate in that as well. “