Demand for social infrastructure investments outstrips supply

From
Mark Pratt

Mark Pratt

Strong investor demand for alternative real estate investments such as social infrastructure has seen strong inflows into Australian Unity’s Healthcare Property Trust (HPT) over the last year.

Mark Pratt, head of real estate investment at Australian Unity, said HPT has received inflows of approximately $140 million over the last financial year.

“The on-going demand from investors for social infrastructure investments has been a trend for some time now and shows no sign of diminishing.

“The resulting inflows into HPT have given us significant capacity and the challenge for us now is to find the right assets to add to the fund.

“Social infrastructure assets including private and public hospitals and medical facilities have always been thinly-traded.

“We are continually looking for opportunities to expand and have circa $350 million in available capacity to acquire new properties that meet our acquisition criteria, or to expand existing ones to enhance the services they provide.”

Mr Pratt said that competition for assets from both onshore and offshore investors has intensified in recent years.

“We are always working with existing tenants to help them grow via brownfield developments.  A good example of this is our development of The Valley Private Hospital in the Victorian suburb of Mulgrave, which delivered many benefits to the area including additional jobs as well as enhanced medical care and support.

“There is untapped potential for existing private owners, including churches and charitable organisations, to release capital held in their properties to facilitate further development and growth.

“We believe there is a significant role for private capital to support and expand the social infrastructure services that are currently provided primarily by the public sector – a role that will inevitably change in coming years as the government seeks alternatives to support the provision of healthcare and medical services required by our ageing population.

“Use of private hospitals will continue to rise to take the pressure off the public system, which in turn will increase demand on existing private hospitals and medical centres.

“This will be to the benefit of investors who have enjoyed attractive stable returns since the HPT started 15 years ago despite recent market and economic volatility,” Mr Pratt said.

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