Unlisted New Zealand Commercial Property Funds (for Retail Investors) Explained

Our guide provides an introduction to Unlisted Commercial Property funds and looks at New Zealand’s funds of this type - Centuria, PMG, Oyster and Senior Trust. We explain their strategies, risks, returns, fees, and suitability for retail investors seeking steady income and diversification.

Unlisted NZ Commercial Property Funds (for Retail Investors) Explained

Updated 24 November 2025

Summary

Investing in commercial property appeals to many retail investors because it can provide steady income and the potential for long-term growth.
In New Zealand, the unlisted commercial property fund sector has grown steadily, and several funds are now accessible to everyday investors.
This guide lists well-known names in the space - Centuria, PMG, Senior Trust and Oyster, and compares how they operate and what they offer.

To help you understand how unlisted commercial property funds work as well as their benefits and risks, this guide covers:

What are Commercial Property Funds, and How are They Structured NZ

Our Introduction to Unlisted Commercial Property Funds

The commercial sector has experienced ups and downs, and even though interest rates are starting to fall and some confidence is slowly returning, there is still a lack of leasing demand than pre 2022. However, some unlisted property fund managers are moving quickly to raise new capital before further cuts push property yields down again. This is arguably driving more interest in unlisted commercial property funds.

At the same time, listed property vehicles on the NZX have traded at double-digit discounts to net tangible asset value, reminding investors that "daily liquidity" can cut both ways - it delivers a convenient exit but also exposes unit prices to every mood swing of global markets. Against that backdrop, unlisted commercial property funds have quietly multiplied.

Commercial property funds have a simple pitch - pooled ownership of warehouses, supermarkets, or retirement village debt; professional management; favourable tax arrangements; and unit prices revalued by independent valuers rather than by headline-hungry traders. Retail investors can now enter the sector with lower minimum investment requirements in funds such as Centuria, PMG and Senior Trust.

What are Commercial Property Funds, and How are They Structured?

A commercial property fund is nothing more than a managed investment scheme that owns one or more physical buildings (or, in Senior Trust's case, lends against them).

Generally:

Investors buy units or shares in the fund. The manager then uses that capital, together with bank borrowing, to purchase or finance the underlying properties.
The income received from the properties, or interest in the case of lending funds, is first used to cover loan repayments and day-to-day expenses.
Whatever is left over is then distributed to investors, often on a monthly or quarterly basis.
By pooling investor capital, the fund can spread its holdings across a range of tenants and property types.
Management fees are usually linked to the value of the assets and the rental income they generate, rather than being tied to harder-to-interpret performance targets.
In almost every retail-friendly vehicle, the fund itself is structured as a multi-rate Portfolio Investment Entity (PIE), so the tax on your share of rental income is collected at your personal Prescribed Investor Rate (PIR), usually 10.5%, 17.5% or 28%, which can provide a tax advantage if you’re in the 33% or 39% tax brackets.
The level of borrowing in these funds varies. It is normally governed by the lending bank and by the fund’s own investment policy.

Important: We believe every investor must read and understand the Product Disclosure Statement (PDS) and give it the same forensic attention they would give a rental-property information pack. We suggest looking for the LVR covenant (establishing the maximum loan-to-value ratio a fund can have), interest-cover ratios (how easily a fund can pay its interest from rental income), and hedging schedule (plan for locking in fixed interest rates to manage borrowing costs).

How are Unlisted Commercial Property Funds Financed?

Unlisted commercial property funds are usually financed by combining investor money (raised through a Product Disclosure Statement) with bank loans. Most funds borrow around 40% to 50% of the property’s value. The loans are often three-year revolving facilities, with 40% to 60% of the debt locked in using interest-rate swaps to manage rate changes. Investors are exposed to the remaining floating-rate portion. A key risk is refinancing; it’s critical to always check quarterly reports to see when the current loan expires and how the manager plans to renew it.

Understanding the Difference Between Listed and Unlisted Commercial Property Funds

Listed property funds trade on the NZX, are priced minute-by-minute by supply and demand, and can deviate heavily from the appraised value of their underlying buildings. Examples include Goodman Property Trust (GMT), Kiwi Property Group (KPG), Argosy Property (ARG), Precinct Properties New Zealand (PCT) and Investore Property (IPL).

Unlisted funds reprice units periodically based on independent valuations and have no on-exchange liquidity. That means that when sentiment turns sour (for example, after a negative GDP result or economic outlook), listed funds can plunge even if the tenant rent roll remains unchanged.

Unlisted investors avoid mark-to-mood (real-time pricing changes) volatility but must rely on a manager-run matching service or periodic redemption windows to exit. However, this means investors swap intraday liquidity for price stability.

From a behavioural finance perspective, unlisted commercial property funds often help investors stay the course, capturing rental compounding they might otherwise forfeit by panic-selling. However, it also means capital can be tied up for months.

Before committing funds, we suggest you check:

Whether the scheme maintains a unit buy-back facility
The notice period for redemptions
If any queue mechanics prioritise hardship cases over ordinary sellers

The Pros and Cons of Investing in Unlisted Property Funds

Pros
Investors are often drawn to unlisted commercial property funds for a few key reasons:

Consistent income
Commercial properties typically have long leases, often ranging from 5 to 15 years, and often feature national brands as tenants. This creates a relatively steady flow of rental income. Many leases are structured so that the tenant covers most outgoings, such as rates and insurance, which helps protect the investor’s income stream.
Transparent valuations
Unit prices are usually reviewed through annual independent valuations. This ties the value of the investment to expected future rental income rather than short-term market sentiment or wider economic headlines.
Potential tax advantages
These funds are generally structured so that tax is applied at the investor’s own prescribed tax rate, capped at 28%. For investors with higher personal tax rates, this can result in a lower effective tax bill. The fund manager also handles compliance matters such as GST and depreciation, removing that administrative burden from the investor.
Diversification benefits
By investing in a fund rather than a single property, investors gain exposure to multiple buildings, sectors, and locations. This spreads risk and can help smooth returns over time, especially when conditions vary across markets.
Professional management: Unlisted commercial property funds are managed by experienced professionals who have in-depth knowledge of the property market. This can be advantageous for retail investors, as they can rely on the expertise of these professionals to make informed decisions on their behalf.

Cons include:

Less liquidity: Because you are unable to easily buy and sell units on the open market, such as the NZX, you can expect to hold the unlisted commercial property fund units for longer (minimum five years).
Higher fees (in some cases): Because these products are unlisted, fees are generally layered (management fees of about 0.5% to 0.85% of gross asset value), property management fees (6% of rent), acquisition fees (1 – 2% of purchase price), and sometimes performance fees. All these add up over time.
Potentially higher leverage: Some unlisted commercial property funds borrow more to fund property acquisitions, which amplifies both yield and downside risk.
Location: Even in a national portfolio, risk comes from local markets. A single lease that is not renewed in a smaller centre, such as Tauranga, can affect returns across the portfolio. Unlisted funds tend to appeal to investors focused on income and comfortable trading some liquidity for the possibility of higher, more stable yields. The key is to check the manager’s track record, understand how much the fund has borrowed, and be clear on how units can be bought or sold if you need to exit.
Capital growth uncertainty: While commercial property investments can offer long-term capital growth, there is always an element of uncertainty, particularly during economic downturns.

The Risks of Investing in Commercial Property Funds

If you are determined to invest in unlisted commercial property funds, we suggest moving slowly and examining how each manager manages risk. Good risk management is central to protecting capital and maintaining steady returns over time. Important considerations include:

Diversification: Most fund managers aim to spread investments across several properties, sectors, and locations. This reduces the impact of any one asset or tenant performing poorly.
Tenant selection and lease terms: The quality of the tenants and the structure of the leases are key drivers of income stability. Strong managers focus on tenants with sound financial positions and negotiate leases that provide predictable rent, regular rent reviews, and built-in rental increases where possible.
Active asset management: These funds are not simply passive landlords. Managers work to maintain or improve the properties in their portfolios. This may involve refurbishment, upgrades, or renegotiating leases to support occupancy and rental income.
Debt management: Most funds use borrowing to help purchase properties. It is important to understand how much debt the fund takes on, the cost of that debt, and how comfortably rental income covers interest payments. These factors can indicate how resilient the fund may be in the face of changing market conditions.

How Much Do I Need to Invest to Access an Unlisted Commercial Property Fund?

We believe minimums have collapsed in recent years, eliminating the old "$50,000-plus" barrier. Companies like Centuria, PMG, Senior Trust and Oyster have all reduced their minimum investment requirements. The sliding scale means everyday savers can build a diversified portfolio of two or three funds for under $5,000, while investors chasing larger positions can add multiple $25,000 syndicates across geographies and lease profiles.

Important: Application money is typically held in trust until the offer is accepted - once your units are issued, some funds with buy-back facilities require you to keep a minimum investment for a set period (for example, $5,000 for 12 months). This rule prevents investors from selling most of their holdings and leaving behind very small leftover amounts, known as “residual balances”, which are expensive and time-consuming for the fund to manage.

Finally,you’ll need to factor in brokerage fees but allow for Anti-Money Laundering (AML) and Know Your Customer (KYC) paperwork, as well as transfer fees, when selling on the manager's secondary market.

Who should invest in unlisted commercial property funds?

Unlisted commercial property is not a substitute for term deposits. Monthly income can be paused if vacancies rise, interest cover falls below bank requirements, or lenders impose new conditions. You can also lose money if the fund winds up and liabilities (e.g. money owed) exceed the value of the assets sold (e.g. property). Unlisted commercial property funds are arguably best suited to investors who:

Have at least a five-year horizon
Want a regular income of about 5 to 8% before tax
Already hold liquid assets (cash, bonds and/or ETFs) for emergencies
Understand that property values can fall 10 to 20% in one revaluation cycle

Our View: If you are determined to invest, we suggest you diversify across different fund managers and tenant types (industrial, office, healthcare, etc.) to reduce the impact of unexpected shocks in any one sector. Because these funds are taxed under the PIE regime, investors on a 10.5% PIR keep more after-tax income than they would from term deposits taxed at 33% Resident Withholding Tax (RWT). Just ensure your PIR is set correctly — if it’s too low, the IRD will claw back the difference and may charge interest on the use of money.

A Shortlist of Major Unlisted Property Fund Providers in New Zealand

Research Note: We have compiled this data from public sources and fund disclosure documents. Commercial property funds update their terms and performance figures quarterly - confirm current details with providers before investing.

New Zealand's unlisted commercial property fund sector includes several established providers such as Centuria, PMG, Senior Trust and Oyster. Each takes a different approach to property investment, and rather than making specific recommendations or detailed comparisons, we outline the general characteristics investors should consider.

Industrial and Logistics-Focused Funds

Providers like Centuria often offer funds focused on warehouse and distribution properties, particularly those leased to major retailers or logistics companies.
These funds typically appeal to investors seeking exposure to the e-commerce boom and supply chain infrastructure.
Industrial properties often feature longer leases and lower maintenance requirements than office buildings.

Diversified Property Funds

PMG and Oyster operate diversified portfolios spanning office, retail, and industrial properties across New Zealand.
These funds aim to smooth returns by spreading risk across different property types and locations. The trade-off is that lower performance in one sector (like CBD offices post-COVID) can drag down overall returns.

Retirement Village Lending Funds

Senior Trust takes a different approach by providing loans to retirement village and aged-care developers rather than owning property directly.
These funds earn interest from secured lending rather than rental income. While they may target higher returns, they carry different risks - including borrower default and sector concentration.

What to Know Before Investing in Unlisted Commercial Property Funds

Regulation Levels Differ

Before investing, confirm how the fund is regulated. Well-known managers such as Centuria, PMG and Oyster operate under a Managed Investment Scheme licence under the Financial Markets Conduct Act 2013. This regime sets rules around disclosure, reporting, and oversight.

Other providers, such as Senior Trust, use different regulatory structures. In these cases, it is important to understand how the fund is regulated, what protections are in place for investors, and why the manager has chosen an alternative approach. Make sure this is clearly explained and that you are comfortable with the level of oversight before committing funds.

Leverage Varies

Before investing, examine the fund’s current loan-to-value ratio (LVR) and covenant headroom (the gap between the fund’s current position and the lender’s limit; the larger the gap, the lower the risk).

Any leverage above about 45% materially increases both upside and downside risks, so understanding exactly how much debt sits against the portfolio and how close that debt is to breaching lender covenants gives you a sense of the cushion, or lack thereof, if property values fall or interest rates rise.

Payout Track Records are Important

A stable distribution history is a strong indicator of prudent management, so review five to ten years of quarterly or monthly payouts and note whether the manager cut or deferred distributions during that time.

A track record of holding or growing payments during periods of increasing interest rates typically indicates that the fund is conservatively leveraged and well-managed, with close attention paid to asset performance and cash flow.

Liquidity is Essential

Since unlisted property is inherently illiquid, the fund’s exit route is crucial. Does the manager operate a matching service to pair buyers and sellers, maintain a buy-back pool that can source liquidity internally, or plan to wind up the fund after a set period (typically seven to ten years) and return capital to investors?

Reviewing how previous exit windows have worked, and whether units have traded at discounts or occasionally premiums to NAV (Net Asset Value, the per-unit value of the fund’s underlying properties after debt), will help you understand how easily you might be able to cash out and what price you could realistically receive.

Diversification Matters

Portfolio diversification is another pillar of risk management. Single-asset trusts that own just one office tower or retail centre magnify tenant-specific risk: if that sole tenant vacates or negotiates lower rent, distributions can plummet. Diversified funds spread exposure across sectors, including industrial, retail, office, and healthcare, which helps steady returns over time, even if part of the portfolio is invested in sectors under pressure, such as CBD offices still adjusting to hybrid work patterns after COVID.

Fees Can Add Up

Take time to add up every charge, including: acquisition fees on property purchases, annual management fees (often 0.5–1% of AUM, or Assets Under Management, meaning the total value of the fund’s properties), property management fees paid to local agents, and performance fees (typically 10–20% of returns above a set hurdle, such as an 8% internal rate of return). A stacked fee schedule like this can easily absorb two to three percentage points of gross income before it reaches investors, reducing your net yield.

Understand the Manager Alignment

The manager’s interests should be closely tied to yours. Check whether directors and senior staff have made meaningful personal investments in the fund and what proportion they own compared to outside investors. When management has real “skin in the game,” they’re more likely to protect capital, manage risk sensibly, and prioritise steady income over short-term fee generation or high-risk deals.

Anticipate Future Fundraising

Some funds, especially those with significant development or major refurbishment programs, may require further equity injections. Ask about the likelihood of future capital calls, how dilution mechanics will work if new equity is raised, and whether existing investors have a first-right-of-refusal (opportunity to buy or lease an asset before it’s offered to others). Being blindsided by unexpected top-ups can disrupt your cash-flow planning.

Take into Account Your Timeframe Alignment

Unlisted commercial property works best as a long-term investment. You should only commit funds that you are comfortable leaving in place for at least five to ten years. If you rely on the income for day-to-day living costs and the fund reduces or pauses distributions, you may not be able to access your capital quickly. In that situation, you could be forced to sell units at a discount or wait longer than expected to withdraw your money.

Understand the Tenant Type

It is important to examine the mix of tenants within the portfolio. A diverse, financially stable tenant base can help sustain steady income and reduce risk. Essential service tenants, such as supermarkets, logistics warehouses, and healthcare facilities, proved resilient during COVID lockdowns, while CBD offices remain under pressure from hybrid work trends.

Sectors such as retirement villages or student housing each carry unique demand cycles and regulatory risks; knowing who pays the rent is key to forecasting vacancy rates, rental growth, and the fund’s ability to sustain distributions through future market cycles.

The Bottom Line

Our view is simple - term deposits barely beat inflation, the sharemarket doesn't appeal to everyone, and residential property has become problematic in an economic downturn.

Unlisted property funds are essentially leveraged bets that commercial tenants will continue to pay rent while interest rates fall. When it works, you get 6-7% distributions taxed at 28% maximum. When it doesn't, you can't access your money for weeks, months (or years in some cases).

We believe that many retail investors buy these products for the wrong reasons. They want property exposure without the hassle of being a landlord, but end up with something that behaves nothing like residential property. You're not buying bricks and mortar - you're buying units in a trust that owns leveraged commercial buildings with complex lease structures you'll never fully understand.

The marketing pitch of "stable monthly income" conveniently ignores that distributions can be cut (as has happened with some unlisted funds in the past), suspended (as multiple funds did in 2008 during the GFC), or funded from capital rather than genuine earnings. Unlike investing in a rental property, you can't renovate to add value, choose better tenants, or sell when you need to - your money is entrusted to the fund manager and you can only redeem it when permitted by the fund.

An example of a negative outcome is investing $50,000 expecting steady 7% returns (as advertised by the fund). For two years, it has worked, and you have received these payouts. However, things then change:

Interest rates start to spike, property values drop by 10%+, the fund breaches banking covenants (because the value of its assets, e.g., the buildings, isn't sufficient to cover the debt outstanding to the bank), investor distributions halt, and redemptions freeze.
The $50,000 is now worth $42,500 on paper, but it can not be accessed because withdrawals have been paused.
The fund needs three years to "work through issues," while management continues to collect its 0.85% annual fee on a deteriorating asset base.

Because of the risks, we believe those who should genuinely consider these funds typically include:

Investors who already have 6+ months of emergency cash
Those who won't need the capital for 7-10 years minimum
People who understand they're subordinated to the banks in any wind-up
Investors seeking tax efficiency with PIE treatment at 28% vs 39% marginal rates

Who should arguably avoid them entirely:

Anyone who might need capital within 5 years
Investors who are uncomfortable with 40-50% leverage
People expecting "property-like" capital gains
Those without other liquid investments

Our Conclusion: The uncomfortable reality is that unlisted commercial property funds exist in something of a middle ground - more risky than term deposits, less liquid than shares, more complex than residential property, and managed by people whose fees get paid regardless of your returns.

If you're determined to proceed, we suggest you consider at least diversifying across multiple managers, assume your capital is locked for a decade, and never invest money you might need in an emergency. These aren't bad products, but they won't suit everyone given the risks and limitations outlined in this guide.

Frequently Asked Questions (Related to Unlisted Commercial Property Funds)

How do I invest in an unlisted commercial property fund?

To invest in an unlisted commercial property fund, you will typically need to contact the fund manager directly or work with a financial advisor. They will provide you with information on the available funds and guide you through the investment process.

What are the minimum investment amounts for these funds?

Minimum investment amounts for unlisted commercial property funds can vary depending on the specific fund and its manager. Typically, these minimum investment amounts range from a few thousand to $50,000 or more.

How are returns paid to investors?

Returns from unlisted commercial property funds are typically paid in the form of distributions, which are usually made quarterly or semi-annually. Distributions can consist of both income generated from rental payments and any capital gains achieved from the sale of properties within the fund.

What are the tax implications of investing in unlisted commercial property funds?

The tax outcome will depend on your own situation and tax residency. Most New Zealand investors are taxed on their share of the fund's income. Many of these funds are set up so that tax is applied at the investor’s prescribed rate, capped at 28 percent for most people. This can be more favourable than holding a commercial property directly, but it is still important to confirm how the specific fund you are considering is structured.

How do these funds compare in terms of fees?

Fees differ across managers and products. They usually include an ongoing management fee and, in some cases, additional transaction or performance-related costs. Fees can reflect the size of the fund, the type of properties held, and the level of portfolio management. It is worth reading the fund’s Product Disclosure Statement to understand the full fee picture before investing.

Can I withdraw my investment from an unlisted commercial property fund?

These funds are not listed on a public market, so withdrawals are not always immediate. Some funds offer scheduled redemption windows, while others may require investors to wait until liquidity is available. In some cases, units may need to be sold through a secondary trading facility. Because of this, investors should be prepared for the possibility that access to their capital may take time.