I hope everyone had a restful and happy festive season and have launched into the new year refreshed and full of enthusiasm.
At CW, we have spent the last 3 months looking inward, and revamping our compliance framework, policies and procedures. This is something that you, our valued clients, won’t see directly, but will enjoy the benefits of, safe in the knowledge you’re dealing with a good corporate citizen who takes their obligations incredibly seriously. This process has largely been in response to our engagement with ASIC over this time. I wrote to you all about this last week, and have included a link to that email here in case you missed it.
Market Update
The world moves fast, and the media cycle needs stories (and fear) to feed it every day. Looking back to the same time last year, there are some issues that are still the same (Trump tariffs, Russia/Ukraine war), and some issues that are new or have developed steam since last year (the impact of AI, rising interest rates again).
All of this enormous volume of information can often overwhelm and create indecision and uncertainty. ‘How do we even think about investing with all that’s going on in the world?’. At CW, we think a little differently. We consider the vast majority of the volume of information as ‘white noise’. Sure, a Tariff imposed by Trump, or ongoing energy supply issues in Europe resulting from conflict may impact the everyday Aussie and their investment, but what is the likelihood, and by how much? When we assign a probability of an event, and assign a likely impact should that probability occur, the impact can be seen for what it is…trivial.
What’s far more important is the economic fundamentals of supply and demand in any given market, and how the investment relates to those factors. It is here that the market is unchanged from 12 months ago, (and many years before that): Australia has a fundamental undersupply of housing relative to the demand. It is getting worse as our demand grows with immigration, and our governments are not approving new land, townhouses and apartments fast enough to keep up. This is not new, and you’ll note it’s a theme I keep returning to. But it is these 2 fundamental issues that have proven very profitable for CW clients over the last 10 years, and will continue to be profitable for CW clients for the next 10 years and beyond.
CPA Fund
Another quarter down, and another quarter of strong and predictable returns for the CPA Fund. The first quarter sees us on track to deliver a 9.5% annualised fully-franked return.
A note on our return: as mentioned in the PDS, this is a fully franked return, which means tax has already been paid on it. For our SMSF investors, you get a 100% cash refund on your franking credits. Irrespective of your investment structure, it means that your investment return is equal to the increase in the unit price, plus the cash refund of the franking credits. Spoiler alert: this equals a 9.5%pa return. An easy explanation around franking credits is detailed here. For more information, please speak with your accountant.
We were delighted to successfully close out our first withdrawal offer for the fund in December. Thank you for your patience to those who participated. These will become more frequent as the underlying property development assets mature. At this stage, we’re aiming for our next withdrawal offer in Q4 this year. These offers are optional only.
I don’t think I stress enough the risk mitigants the CW team put in place to ensure the protection of your capital, and safe delivery of your returns. CW and its entities have invested just over $1 million in the CPA Fund subordinated unit. This is a first loss provision that means CW would have to lose over $1m before our investors lose a single dollar. We call it putting our money where our mouth is.
Secondly, we have a remarkably high ratio of pre-sales debt coverage in the Fund (66% as at 31 December 2025), which is incredibly high for our sector. It’s another benefit of investing with CW and our experienced team of property and funds management professionals.
Certainty Income Fund (CIF)
Certainty Income Fund continues to grow at a rapid rate, and asset quality (residential mortgages to CW SMSF investors) is performing extremely well, as we expected. It’s met its benchmark returns again this quarter. Bad news for borrowers is good news for investors in CIF, as the return is benchmarked to the RBA Cash Rate, which increased 0.25% this quarter.
If you’re not familiar with the Certainty Income Fund, I’d encourage you to have a chat with your Relationship Manager, or Yasmine, to see if it can help get your spare SMSF cash working for you.
The Sanctuary, Port Macquarie
Construction at The Sanctuary is powering on, with Stage 5 well under way. Stage 8 (apologies for the confusing order of stages – we’re working on simplifying this moving forward!) will start in the next few months, and with only a handful of lots left in Stage 5, Stage 8 sales are now starting to trickle in. Owner occupiers are thrilled with our offering at The Sanctuary, where we’ve retained over a third of the site as native bushland. For our lucky clients, who are the only investors we’ve allowed into the estate, they’re doing well with strong rental demand and little competition to speak of.
Botanic, Toowoomba
There remains a critical land shortage in Toowoomba, and we have experienced this first hand at Botanic. Our first DA tranche of 200 lots is all but sold out, with the last 10 lots we withheld being released next month for CW clients only. Like the Sanctuary, CW clients are the only investors allowed into the development, ensuring a high level of owner occupiers and little competition from landlords. We anticipate civil works completion through to Stage 7 by mid this year. We’ll start on lots 8 & 9 in the next 2 months. This will unlock another 80 residential lots, and a retirement village site that has been pre-sold to a well reputed national operator. The proceeds from these stages are expected to drive the next Withdrawal offer.
The Crossing, Sarina
Yet more positive news in our development portfolio with the release of Stage 1 at The Crossing to the market in November. Since that time we have secured over 50 pre-sales from CW clients and locals alike. It’s very rewarding to see our vision be embraced by the locals, the Council, and State and Federal government, in what is being hailed as the biggest residential investment in Mackay’s history. The Courier Mail ran a story which you can read here. I apologise for the confusion with Richard Meier as CW CEO in the article. Rich does a remarkable job in the marketing of our projects, but as I joked with him – he’d have to take a pay cut if he was to take on that role!
We anticipate starting construction in April of this year, and it would be a 12 month program to deliver the lead in infrastructure and 85 residential lots.
Riverbend, Mirani
Construction was flying along before Christmas, and then, the wet season struck. We’re almost 50% through civil construction of Stage 1, which is completely pre-sold. We anticipate this being completed by August, where house construction will start shortly thereafter.
We will release Stage 2 to the market next month, and expect a similar result to Stage 1 – demand outstripping supply.
We are proud to announce that CW have secured funding from the Qld State Government’s Residential Activation Fund to construct critical trunk infrastructure which has unlocked this site for residential development. It’s great recognition for the work we do in key regional areas, developing affordable housing and playing our small part to be a solution provider to our housing crisis.
Warragul, Victoria
We received feedback on our permit application for Warragul last week, and we’ll work with the Council to address that and move our application forward. We don’t anticipate approval until towards the end of the year.
New Staff
Another quarter brings a raft of new faces to the CW team.
We welcomed Cristian Fuenzalida as our new Head of Compliance, Jack Sutherland and Jacquelyn Prasad in our lending team, Lily Talbot in our Contracts Administration team, Kaleb Roberts as Team Leader in Direct Capital Inflows, and Jessica Pitcher to our Client Relations team.
On that note, we’ve retasked Yasmine, Amanda and Annette into our newly created Client Relations team. They’ll be systematically reaching out to you over the course of the year to conduct market reviews, portfolio updates, or just address any queries you may have with your investment. They’re a great bunch, and fill an important gap in our service offering, giving you an easy point of contact and regular updates on how your investment is tracking.
As always, thank you for your ongoing support. We don’t take it for granted, and without it, my team and I don’t get to wake up and do what we love doing every day.
Kind regards,
Damien Gwynne | Managing Director
