National healthcare, financial services and retirement living group Australian Unity is developing a proposal to list the Australian Unity Office Property Fund on the Australian Securities Exchange.
The move, subject to approval by the trust’s board and unitholders, is being made to support the fund’s long-term growth and comes as listed investors demand new product.
The income-based, unlisted property fund has a portfolio of eight office assets across NSW, Victoria, ACT, SA and Queensland worth $365 million and is ripe for expansion.
It is intended that a proposal will be issued to investors to allow them to consider listing the fund and, at the same time, making a withdrawal offer for those who want to exit.
Mark Pratt, general manager of Australian Unity Real Estate Investment, said the proposed listing would allow the fund to grow by accessing additional public capital markets.
“We have considered several options for the fund and believe that developing a proposal for an ASX listing will be in the best interest of existing investors, particularly around improved access to capital providing greater capacity for further growth and maximising returns. It also aims to provide liquidity for investors who wish to exit their investment,” he said.
“In the meantime, the fund will continue to be managed for the benefit of all investors while the proposal is developed,” he said.
Mr Pratt said the fund’s portfolio of properties had solid characteristics that are highly sought after. These include a strong tenant profile, with nearly 60 per cent of the income being derived from tenants with at least an investment grade credit rating, and geographic diversification with exposure to most Australian states being held.
There is also 44 per cent allocated to the service-orientated state of NSW and no exposure to the weakening WA economy. The structural rental increases — most leases have contracted annual rental increases — and the balanced nature of the portfolio by property characteristic are also considered to be attractive.
“The portfolio is solid and, in its current form, is driving a competitive distribution yield for investors,” Mr Pratt said.
Australian Unity real estate investment arm was set up in 1998 and it owns and manages more than 50 properties in the healthcare, retail and commercial sectors across Australia. It has more than $1.98 billion in funds under management.
The flagship fund, the Australian Unity Healthcare Property Trust, owns 25 hospitals, medical centres, and aged care facilities across Australia, and has more than $700m in funds under management.
This article first appeared in The Australian Business Review