Lonsec’s Recommended rating indicates Lonsec has strong conviction that the Fund can generate risk-adjusted returns in-line with relevant objectives and is considered an appropriate entry point for investors to this asset class.

In its product review report, Lonsec highlighted the strong alignment between Australian Unity’s purpose and the Childcare Property Fund’s investment strategy as a key strength. It mentioned advantageous market drivers in the national childcare sector including long-term policy support and favourable demographic changes driving demand for childcare services.

Mark Delaney, Fund Manager of the Childcare Property Fund at Australian Unity, said the rating validated the Fund’s investment strategy and highlighted strong market drivers underpinning childcare property.

“Lonsec’s rating is an important recognition of our objectives, management approach and track record as a leading investor in nation-building social infrastructure. It’s also a testament to the fund’s stable portfolio and strong sector performance.

“Our Childcare Property Fund’s purpose is to give Australian investors the opportunity to partner in the creation of a high-quality childcare portfolio across Australia, contributing to better early childhood development outcomes whilst receiving quarterly income and capital growth opportunities,” said Mr Delaney.

Launched in early 2022, the Australian Unity Childcare Property Fund’s portfolio includes 15 childcare properties across Australia, with a gross asset value of approx. $90 million and Weighted Average Lease Expiry (WALE) of 14.74 years.

The Childcare Property Fund is one of several Social Infrastructure funds established by Australian Unity including Specialist Disability Accommodation, Seniors Living, Healthcare Property, and Purpose-Built Student Accommodation. These funds aim to capitalise on favourable demographic and macroeconomic tailwinds to deliver strong risk adjusted returns to investors while adding valuable capacity in these essential sectors.

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In the role, Mr Orr will be responsible for assisting Australian Unity’s business development team service and support financial advisers and dealer groups by providing access to investment opportunities across a range of asset classes.

Mr Orr joins Australian Unity from Challenger Limited where he spent more than two years as Business Development Manager for NSW. Prior to this, Mr Orr spent almost eight years at Macquarie Bank in business development and advisory roles.

Adam Kirk, Head of Intermediate Markets at Australian Unity Wealth & Capital Markets, said Mr Orr’s appointment will ensure financial advisers and dealer groups in NSW and ACT receive exemplary support from a trusted and knowledgeable professional.

“We’re delighted to welcome William to Australian Unity. William will play a key role in the team supporting our network of advisers across NSW and ACT to maximise the investment opportunities available to them by drawing on his strong market intelligence,” Mr Kirk said.

Mr Orr holds an Advanced Diploma of Financial Planning from Kaplan, and is currently completing a Graduate Certificate of Applied Finance through Macquarie University.

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Ms Kerr-Smith joined Australian Unity in 2017 as Group Executive, Finance & Strategy, where she has led the Group’s finance function and overseen the shaping and implementation of the Group’s strategic objectives. She has also led Australian Unity’s engagement with a range of market stakeholders to advance its capital markets, community value and social infrastructure agendas.

In announcing the appointment, Australian Unity’s Group Managing Director, Mr Rohan Mead said: “We look forward to Esther moving to the Wealth & Capital Markets CEO role. She has already demonstrated that she is a passionate leader with a deep capacity for value creation and impact. Esther will be a great asset to Australian Unity as we move into our next phase of growth, especially as we continue to pursue our social infrastructure agenda.”

Ms Kerr-Smith’s prior experience covers financial services, infrastructure and human services design and delivery. She was a senior executive with the National Disability Insurance Agency— leading the market stewardship and commissioning functions and has held senior roles at strategy consulting firm Boston Consulting Group and within Macquarie Group’s infrastructure division.

Mr Mann joined Australian Unity in 2012 and has held numerous senior roles within the Finance and Strategy function.  In 2015 as Group Treasurer, he oversaw the refinancing of the Group listed debt and was instrumental in issuing Australia’s first simple corporate bond.  Prior to this appointment, Mr Mann was the Deputy Head of Finance and Group Chief Financial Officer where he led the Group transformation program for the Finance function.

Mr Mann’s prior experience includes a decade in London, predominantly working on large scale integration and transformation programs with Merrill Lynch Investment Managers, Lloyds Banking Group and the Royal Bank of Scotland.

Announcing Mr Mann’s appointment, Mr Mead said: “Darren has played a significant role in shaping the Group’s finance function in the eight years he’s been with Australian Unity.  This appointment recognises Darren’s capability to steward the company’s finances and shape our strategic growth agenda. Darren is an adept leader and will continue to motivate the Group through its next growth phase.”

Ms Kerr-Smith’s appointment follows David Bryant’s resignation as CEO of W&CM earlier this year and Mr Mann’s appointment comes after the appointment of Ms Kerr-Smith to the role of CEO, Wealth and Capital Markets, with both appointments to take effect on 13 July 2020.

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Anna Hacker

Say “estate planning” and most people think of a Will.  But while a Will is an extremely important document, the value and importance of having an Enduring Power of Attorney as part of an estate plan should not be overlooked, says Anna Hacker, Wills & Estates Accredited Specialist at Australian Unity Trustees.

“An Enduring Power of Attorney is the tool that can help protect people – particularly anyone who is vulnerable because of age or health problems ­– from those who are unscrupulous, greedy or neglectful,” Ms Hacker says.

She points out that it is vital to choose the right person for the role.

“We always advise people to carefully consider who they can trust, and not just to choose their oldest child, for example.

“It must be someone that you can rely on to do the right thing by you, make decisions that are in your best interests, and properly meet their obligations and responsibilities.  There are specific guidelines and regulations for people acting as Enduring Power of Attorney, and if they don’t meet them then they could be acting illegally.”

Ms Hacker said that while no-one would like to believe it could happen to them, there are many examples of adult children, or other family members or neighbours, acting dishonestly and taking advantage of elderly people.

“Elder abuse is becoming recognised as a serious issue in Australia, and having an Enduring Power of Attorney should be on everyone’s radar.

“It can happen to anyone, regardless of how much wealth they have, how strong they believe their family ties are, or how capable they think they or their nominated attorneys are.

“We have seen examples of sons or daughters taking their mother into the bank and getting them to withdraw large sums of money, and then hand it over for their own personal use.

“Having an Enduring Power of Attorney would add an extra layer of protection, as the attorney is then the only person the bank is authorised to deal with.  In addition, they would be monitoring bank statements and would be alert to any unauthorised or unusual activity.

“In other cases, we have seen adult children forcing their parents to take a mortgage out on their home and then pocketing the money, and the other siblings only finding out when the house needs to be sold to pay for aged care accommodation, or when their parent passes away.

“To most of us, such stories seem unbelievable, but they are happening and, sadly, they are probably happening more often than we realise. Many elderly parents are either too ashamed to admit what their children are doing, or are cognitively impaired and unable to understand that they are being left financially destitute.

“Again, a properly chosen Attorney is the best way to protect yourself from this kind of  situation.”

Ms Hacker says that unfortunately it can be quite a complicated area, as Enduring Powers of Attorney have slight nuanced differences from state to state.

Generally speaking, there are three different types of power of attorney:

• General Power of Attorney – someone is appointed to make financial and legal decision, often for a defined period of time.  For example, if you are going overseas for an extended period and want someone to look after your financial affairs while you are away.  This automatically ends when the period is ended, or if you lose the capacity to make decisions yourself
• Enduring Power of Attorney – this continues to operate after you lose capacity.  For instance, someone suffering from dementia is likely to benefit from having an Enduring Power of Attorney prepared so that when they have lost capacity, someone is in a position to act on their behalf
• Document related to medical decisions – the terminology and requirements for this changes from state to state and the power of the attorney also changes but generally, it allows someone to make medical decisions on your behalf, if you are no longer able to do so.

Ms Hacker says an Enduring Power of Attorney is an important consideration for everyone, not just people who are older or with a known illness that may affect mental capacity.

“For example, if you have an accident or a sudden illness that causes you to lose capacity to manage your financial affairs, no one will be able to access your assets on your behalf, such as your bank account or superannuation, unless you have an Enduring Power of Attorney in place and have appointed someone who will consider that your needs and wishes are taken into consideration as financial decisions are made.

“Your investments may require an important action to be taken, but you might not be in a position to do so.

“As long as the right person is chosen, having an Enduring Power of Attorney can make a huge difference to your security, quality of life and care,” Ms Hacker says.

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Anna Hacker

As Australia’s population ages, the number of people who will be affected by dementia is a growing issue, and as well as the personal and emotional impact of dementia on both the individual and their family, there is also a practical consideration.

“We are increasingly talking to people who have a parent suffering from dementia, who perhaps doesn’t have a Will, or whose personal circumstances have changed and whose current Will is no longer appropriate,” says Anna Hacker, Wills & Estates Accredited Specialist at Australian Unity Trustees.

“However, just because a person no longer has the capacity to make or update a Will, it doesn’t mean there is nothing that can be done.

“Each state in Australia allows for statutory Wills, which can be approved by the relevant Supreme Court for signing on a person’s behalf.

“For instance, there was a case recently where an elderly woman developed dementia and moved in with her son from her first marriage so he could care for her, as unfortunately her second husband was unable to act as her primary carer.

“Her second husband had applied for a family law property settlement and received a substantial portion of their combined estates in his own name.  This meant that the arrangements in her existing Will were no longer appropriate, as she had directed that her estate be divided between her husband and her children.

“Her son was able to apply to the Court to change his mother’s Will so that the majority of her estate went to her children and grand-children.  The Court accepted that this would have been her wish, if she still had capacity to change her Will.”

In order for a person to have a statutory Will made on their behalf, the Court must be satisfied that they lack testamentary capacity.

The Court will also decide whether the proposed Will is what the person would have wanted – not the family members or beneficiaries proposing the Will,” Ms Hacker says.

She also points out that dementia is not the only reason for needing a statutory Will.

“Another recent court case involved a young child who had severe physical disabilities as a result of problems at birth.  He had received $3.2 million in damages against the hospital which had been used to purchase a house for him, his mother and siblings, as well as produce an income.

“His father had had little to do with him since he was born, and his mother was his primary carer.

“The child was about to undergo serious surgery and an application was made for a statutory Will to be made on his behalf, as he had never had capacity to create his own Will.

“The Court eventually approved a Will that left the majority of the estate to the mother and siblings, with a small portion allocated to the father.

“Without the statutory Will, the father would have been able to claim part of the family home and the funds, which would have seriously affected the other children and their mother.

“While they are often a final resort, statutory Wills should always be considered when looking at estate planning options.  If a person has lost capacity, or indeed, never had capacity, it is entirely appropriate to look at whether a statutory Will can be made.

“Often, statutory Will applications are accepted by all parties and can allow for inclusion of strategies such as discretionary testamentary trusts,” Ms Hacker says.

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David Bryant

With the prospect of a Donald Trump win in the US elections, and a passive Reserve Bank of Australia (RBA) continuing to hold interest rates at an all time low, the pressure on yield seeking investors such as self-funded retirees is increasing, says David Bryant, head of Australian Unity Investments.

“We are set to be in a low interest rate environment for some time so investors need to accept this fact and make investment decisions accordingly.

“On top of this, markets are continuing to slide as investors sit on the sidelines, waiting until the US election result is known.

“There is unlikely to be any respite until after the US election, and even then the RBA is likely to continue its passive approach for now, with no rate cuts or increases until the picture becomes much clearer.

“One of the biggest risks now facing investors is opportunity risk which happens when one investment opportunity is chosen, and then finding that another better opportunity exists or may arise.

“The opportunity risk for retirees with cash tied up in term deposits, as well as lazy long term investors who keep their savings in interest bearing bank accounts because they have never got round to looking at other investments, is increasing all the time.”

Mr Bryant said that investors and savers can reduce opportunity risk very easily, without taking on high levels of other risk, by seeking other investments and adding diversification to their portfolio.

“For lazy savers this means looking for growth assets that will also add to their capital over time

“For retirees, diversification and increased returns is achieved by adding a number of different yield-producing assets, thus managing risk through diversification and ensuring investors don’t have all their eggs in one basket.

“A major mistake yield-seeking investors can make is moving all their money out of cash and putting it all in whatever investment currently offers the best return.”

He said that the sensible strategy when seeking yield is to balance low returns from fixed interest investments with a mix of higher yield investments, which also manages risk through diversification.

“It means keeping an appropriate position in secure, but currently low interest-producing, fixed interest investments, while spreading investments across a number of other asset classes, including domestic and international shares and property.

“Even within property there should be diversification away from residential, for example into commercial, healthcare or industrial property funds.

“There are also other investment classes that can offer diversity, good returns and access to funds such as the new mortgage funds that have been developed.

“Right now, the best approach for investors is not to keep more money in cash than is sensible for their circumstances.

“For example, for an SMSF in pension mode it makes sense to have a minimum of one year’s pension payments easily accessible, but probably too much more is increasing opportunity risk unnecessarily.

“Cash is simply not a risk free investment in the present climate,” Mr Bryant said.

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David Bryant

Based on this year’s reporting season results and guidance released to date, investors can expect better results for the 2017 financial year as more companies progress through the difficult process of exiting businesses and restructuring operations, says David Bryant, CEO at Australian Unity Investments.

“Across the market as a whole, company earnings for the financial year 30 June 2016, are down on the previous year by around 8 percent, but this reflects the major impact of resource companies where average earnings fell 48 percent. Excluding this, company profits have grown around 5 percent this financial year.

“The big write downs we saw this year, largely in resource companies, shouldn’t be repeated in the 2017 financial year.

“Overall it has been a fairly stable reporting season, without too much unexpected bad news.”

Mr Bryant said if the growth forecast for next year of 6-7 percent is achieved investors should be kept reasonably happy, particularly given the shrinking number of alternative investments given record low interest rates.

“However, we are likely to see continued pressure on dividend yield which will concern some investors, particularly in certain sectors.

“Investors still need to embrace equities, but they need to be very selective in companies and sectors they invest in.

“The resources sector results have been very poor, as expected, and the banking sector is struggling to deliver much growth given low rates, strong competition, and increasing bad debt levels.

“That leaves only around 40 percent of the market to work with, and as this profit reporting season has shown there is a big gap between the best and worst companies.

“If you contrast stocks like Qantas, who embarked on their Transformation program two years ago after a reporting significant write-offs, today they are showing the benefit of that work.

“Companies like Wesfarmers and Woolworths are tackling those issues, but we are in the midst of the write-downs and restructuring work, so their improvement is realistically a year or two away yet.

“The message from reporting season so far, is that investors will need to continue to have lower expectations of returns for the rest of 2016, as low interest rates and limited earnings growth prevail.

“As a result, investors need to be more well-researched and selective than ever, because the easy option of just investing in resources and banks is gone, and the winners and losers in the next couple of years will deliver substantially different outcomes for investors.”

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Chris Smith

The healthcare property sector continues to perform very strongly, with Australian Unity’s Healthcare Property Trust (HPT) delivering a total return of 20.01 per cent, (7.17 per cent income and 12.84 per cent growth) for the financial year ending 30 June 2016.

Valuations across the total portfolio were up nine per cent from the prior year and gross asset value now stands at more than $1.1 billion.

Chris Smith, head of healthcare property at Australian Unity Real Estate Investment, said the sector continues to demonstrate consistent performance, delivering solid income returns and good capital growth for investors.

“Recently released data from the IPD Australia Healthcare Investment Digest highlights the continued strong performance of the healthcare property sector driven by increased demand for assets, record low interest rates and broader investor appetite for the specialist assets.”

According to IPD, the sector’s total return for the year ended 30 June 2016 was 23.2 per cent, up from 18.5 per cent in the previous year.

IPD also reported that for the 12 months to 30 June 2016 the average capitalisation rate across the healthcare sector was 7.3 per cent, down from 8.4 per cent from the prior year*.

Mr Smith said Australian Unity maintain a positive and optimistic view of the Australian healthcare property sector.

“Over the coming year, we expect that strong investment demand will continue to provide support to valuations across all property sectors.

“Looking ahead, HPT is well positioned for growth through the development of new and existing assets, together with potential acquisitions.

“With occupancy of 97.64 per cent (by area) and Weighted Average Lease Expiry at 10.58 years (by income at 30 June 2016), our expectation is that HPT will continue to provide investors with a solid and sustainable level of distribution income over the medium term.

Mr Smith said the recent IPD data provides strong evidence that there is still room for healthcare assets to grow despite its double-digit returns over the last 12 months.

“Healthcare assets are becoming more widely sought after by investors, with the sector providing very steady distribution returns over the last 15 years – even throughout the GFC.

“In addition, our view is that major private healthcare operators are well positioned to continue steadily growing and expanding their businesses.

“We have very long term leases in place, upwards of 20 years in some instances, with a range of quality tenants, including some of Australia’s most successful companies and this makes an investment in healthcare property distinctly different to other property sectors where there isn’t that degree of tenant stability.

“Assets are still more thinly traded than other sectors, but we are seeing an increased level of brownfield and greenfield development to keep up with increased demand for healthcare services, which will continue to drive strong returns for investors in the sector,” Mr Smith said.

* MSCI IPD Australia Healthcare Investment Digest – Trends Quarter ending June 2016

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David Bryant

Australian Unity is set to create a global benchmark for health precincts after the Queensland Government confirmed it as the preferred tenderer for the $1.1 billion Herston Quarter project in Brisbane.

Australian Unity plans to develop and then take an ongoing role in an integrated health, ageing and research precinct in the Herston Quarter, which would provide Queenslanders with access to leading health, hospital and aged care services. The new project, integrated within the existing Herston Health Precinct, is designed to attract, train and retain the best clinicians, health workers, researchers, academics and students.

“The Herston Quarter is an important social infrastructure project for Brisbane and Queensland and we thank the Palaszczuk Government for the opportunity to contribute to the development of a world class health precinct,” Australian Unity Group Managing Director Rohan Mead said.

“As the proposed developer and ongoing operator of key facilities including retirement living and aged care services, we look forward to a long term involvement with the precinct and the Queensland community, ” Mr Mead said.

Australian Unity secured the Queensland Government’s preferred tenderer status for the Herston Quarter after a rigorous selection process. Over the next few months Australian Unity will work with the Queensland Government to document and finalise the contracts and the masterplan.

The Herston Quarter is adjacent to the Royal Brisbane and Women’s Hospital in inner suburban Brisbane. The masterplan for the five hectare site includes a public rehabilitation hospital; a private hospital; residential aged care; retirement living and student accommodation; health research; childcare; a co-working hub and education and training facilities.

“Australian Unity has a demonstrated track record of investing in and developing state of the art hospitals, and of building and operating aged care, retirement living and wellbeing precincts,” Mr Mead said.

“We anticipate the billion dollar plus Herston Quarter project will create 700 jobs in the construction phase and hundreds of permanent jobs when the precinct is in operation,” he said.

“As a 175-year old mutual organisation, Australian Unity has no shareholders. Our focus is on delivering community value, through products and projects that meet individual and community needs. We believe Herston Quarter is one such example for Queensland,” Mr Mead said.

Australian Unity Investments Chief Executive Officer David Bryant said the project would be completed in multiple stages over five to ten years.

“We have a successful history of strong investor support for our healthcare development projects, and discussions with relevant partners to support the funding and operating elements of the Herston Quarter are well-progressed,” Mr Bryant said.

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David Bryant

Investors need to look at alternatives to bank stocks for both yield and growth, argues David Bryant, chief executive officer of Australian Unity Investments.

“Banks are getting a lot of attention this reporting season – not always for the right reasons – raising questions about their position as the yield investment of choice.

“Their profits have been soft and pressure on market growth, margins and bad debt ratios are expected to continue.

“And with such low interest rates there is also pressure on banks’ ability to maintain deposits and stem flows to equities and property, possibly putting further pressure on dividend policy.

“What it means for investors is more uncertainty and they should be looking at alternatives to banking stocks, particularly in areas such as commercial property.”

Mr Bryant says that there are few standout opportunities for yield investors and they would be wise to diversify their portfolio, keeping some liquidity so they can take advantage of any new opportunities.

“This approach also helps to manage risk but even the most cautious investors need to balance risk and return and look at other yield opportunities from reputable asset managers that can add to returns in a low yield environment.”

Mr Bryant says that there are still a number of positive signs for investors – for example with both consumer confidence and housing finance showing a pick-up.

“If these trends continue, the outlook for Australian equities remains positive,” he said.

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