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S&P: No change to ratings on Australian Unity Healthcare Property Funds

02 Nov 2011
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Standard & Poor’s Fund Services today announced that there would be no change to the four-star rating on the Australian Unity Healthcare Property Trust (Class A, Wholesale and Retail units), following the launch of a discounted rights offer by the manager. 

Australian Unity Funds Management Limited is seeking to raise a maximum of A$50 million through a non-tradeable rights issue to existing investors, at a 7.5% discount to the funds’ unit (mid) price. The offer will close on Dec. 20, 2011. Proceeds will be applied to the expansion and refurbishment of three assets: Peninsula Private Hospital, The Valley Private Hospital and Beleura Private Hospital. 

There is no dilution impact for investors who take up their full entitlement. The dilution impact for investors who do not elect to take up their entitlement, or only partially take up their entitlement, is minimal. In the event that the offer is undersubscribed, capital expenditure shortfall may be funded via a combination of debt, asset sales and/or existing cash reserves. Importantly, this will not result in a significant deterioration in the fund’s gearing metrics which are conservatively based and managed. 

The aforementioned capital management/expansion initiatives are expected to help deliver enhanced distributions over the long term, and a significantly improved leasing profile. As such, we view them as being consistent with the manager’s focus on delivering strong, and improving, risk-adjusted returns for fund investors.

 S&P will monitor the success (or otherwise) of the discounted rights offer until our next scheduled review of the funds in early December 2011.

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