Standard & Poor’s Fund Services today affirmed the four-star rating on the Australian Unity Healthcare Property Trust (Class A, Wholesale and Retail units).
The three investment options (classes of unit) provide a conservatively managed exposure to the specialised health care property sector but with different fee and liquidity mechanisms.
“We view the team responsible for the trust very highly, in particular, head of health care and retirement property funds Chris Smith. The team, led by Mr. Smith, has delivered strong risk-adjusted returns to investors over a long track record. We’re comfortable that this can continue through the cycle,” said Nathan Bode, analyst at S&P Fund Services.
Since our last review, the trust has raised over A$20 million through a priority rights offer (PRO). Capital raised will be used for the redevelopment and expansion of three hospitals. The PRO reduces the amount required to be funded from borrowings. Importantly, it maintains the fund’s relatively conservative equity/debt structure.
The planned works increase the weighted average lease expiry (WALE), and smooth out the fund’s lease expiry profile (lease extensions have been negotiated for the three hospitals). While expansion and redevelopment initiatives like these introduce risks, and make management of the fund slightly more complex, Australian Unity Investments has strong active-management experience. Importantly, we view the redevelopment and capital management initiatives as being consistent with the manager’s focus on delivering strong, and improving, risk-adjusted returns.
