AUI picks up the Direct Property Fund Manager of the Year award for 2013.

Australian Unity Investments (AUI) has been named winner of the Professional Planner/Zenith Investment Partners Direct Property Fund Manager of the Year award for 2013.

AUI manages a range of diversified property funds, covering healthcare, retail, industrial, commercial and office property and has over $1.7 billion in property assets under management (as at 30 September 2013).

The Professional Planner/Zenith Investment Partners Fund Awards recognise excellence in the application of a fund manager’s investment philosophy and process. Zenith selects award nominees and winners based on its robust and comprehensive manager assessment methodology, which focuses on nine aspects of how fund management businesses are organised and operate including organisational strength, investment philosophy and process, risk management and performance.

Direct Property was one of three new fund categories for the 2013 awards and reflects the growing importance of the sector and the increased interest among financial planners in using property in diversified portfolios.

“The awards are recognised as an assessment of excellence in the retail managed funds industry. Being awarded the inaugural Direct Property Fund Manager of the Year award is a strong endorsement of our investment approach and our achievements on behalf of our investors,” says Mark Pratt, AUI’s head of property, mortgage and capital markets.

“AUI has been managing property funds for 14 years, and believes the Australian property market is currently offering investors attractive yields and stable values.

“An investment in property funds can offer investors access to a range of properties diversified by property type, sector, tenant and geographic location. If investors are looking for a consistent income yield then investment in a well-managed property fund is well worth considering.”

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Damen Purcell, AUI’s head of retail distribution, said the changes will allow AUI to further build and expand its adviser and dealer group relationships at a time when confidence is returning to the retail investment market.

“We are seeing a number of changes in the financial advice community as a result of the growing confidence amongst investors and changes in the way they seek to invest, which means that now is the ideal time to enhance the capabilities and resources we offer customers.

“In addition, the strong growth in certain segments of the market, such as family offices, means there has been a change in the kind of information and structures that some adviser groups require from fund managers, which we are well-placed to provide,” he said.

AUI has created three Key Account Manager roles, promoting Theone Star, Huw O’Grady and Allyce Mitchell to the positions. All three will report to Mr Purcell.

Ms Star, previously national account manager, will be responsible for multi-managers, private banks and brokers, family offices and some NSW-based institutions. She joined AUI in 2005 and has held a number of business development roles in the financial services industry including at Bridges Financial Services and Colonial Margin Lending.

Mr O’Grady will look after major national accounts. He was previously AUI’s regional manager for Victoria, South Australia and Western Australia. Before joining AUI, Mr O’Grady was in business development roles at various firms, including Orchard, Asgard, Ord Minnett and Macquarie Bank in Melbourne, and Morgan Stanley in London.

Ms Mitchell will be responsible for managing AUI’s platform relationships. She has held a number of business development roles at AUI since joining the business in 2009, and was most recently national account support manager.

As a result of these changes, Nick Everitt has been promoted to business development manager VIC/SA/WA. Mr Everitt was previously business development associate, providing sales support to the entire AUI team.

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Taking an investment short cut will almost always end in tears: AUI

With the market and investor sentiment on the way up, one lesson investors should remember is that trying to take shortcuts to achieve out-performance is unlikely to be sustainable and will almost always end in tears, says Edward Smith, head of portfolio management at Australian Unity Investments (AUI).

Mr Smith said the current market situation is likely to encourage the introduction of new products and that the investment community is likely to see a rash of investment products promising out-performance at low risk over the next year or so.

“Some people may argue that now is a good time to look at leveraged products to take advantage of market growth. The challenge is that the risks associated with such strategies are not always obvious, and typically are revealed when it’s too late to reverse,” Mr Smith says.

“Good investment practice requires a clear set of objectives and strong governance. Investors should be wary of the promotion of new investment products that tend to follow rising markets and that claim to give over-the-odds returns.

“There is always danger in accessing volatile markets through complex structures. Wise investors are very circumspect about new products or structures that offer tax or other advantages to enhance returns, as they can be as dangerous to their financial health, especially if they are difficult to understand

“Tried-and-true strategies that involve setting objectives and ensuring a diverse portfolio might seem boring, but boring is good when it comes to managing the life savings of most people.

“Experienced advisers will be reflecting this in their client dealings and adopting an appropriate investment approach in their advice, to reflect their clients’ needs,” Mr Smith says.

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Good yields and stable values in the Australian property market.

The Australian property market is currently offering investors attractive yields and stable values, with the spread between property and Australian Government 10 year bonds at 310-550 basis points for prime assets, according to Australian Unity Investments (AUI).

“Overall, there is a case to consider investing in property now, given the widening yield differential and the continuing low interest rate environment,” says Ryan Banting, head of portfolio management at AUI.

“Property capital values have stabilised and yields are now back to longer-term averages.

“In this environment, we believe property represents a less volatile total return investment profile than other risk asset classes,” he says.

AUI’s latest commercial property market outlook found some property sectors performing better than others, with strong domestic and offshore investment demand for quality office property, and healthcare property delivering the highest returns.

“Low interest rates make office property investment compelling, while currency depreciation is encouraging foreign investors,” Mr Banting says.

“Many large foreign pension funds are increasing their allocation to direct property, with Australian office markets comparing favourably to foreign markets due to our higher yield, lower vacancy rates, greater transparency, and more recently our falling currency.”

The returns and outlook make the property market an attractive option for Australian investors as well.

“Subdued tenant demand is offset by low supply under construction, and highly occupied portfolios are continuing to perform well as most tenants are seeking to renew their existing leases at lease expiry,” Mr Banting says.

“Office property returns continue to trend around the long term average of 10 per cent, comprised of 7.5 to 8 per cent income and 2 to 2.5 per cent capital growth.”

AUI says healthcare continued to deliver the highest total returns of the property sector of between 8.6 per cent and 12.3 per cent (after fees) over one, three and five year periods to June 2013*. It also delivered the highest risk-adjusted returns of the property sector, over the seven-year period to 30 June 2013*.

Healthcare property also brings portfolio diversification benefits.

“Australia’s ageing population and greater incidence of disability underpin demand for healthcare services, and there is a strong correlation between age, disability and the requirement for healthcare services,” says Chris Smith, head of healthcare and retirement property at AUI.

“Non-cyclical demand for core medical services has protected the sector from external market shocks. Hospitals display a consistent performance profile and typically have long leases of 15-20 years. This insulates the income stream and provides capital value stability.

“The healthcare sector also has the lowest correlation with other property sectors, making it a desirable addition to a diversified property portfolio,” he says

In the retail space, AUI has found that property returns are generally softer due to weak growth in retail consumer sales.

Total income returns from industrial property have been consistent at 8.5 per cent (after fees) in the 12 months to 30 June 2012 and 30 June 2013*. AUI believes the medium term outlook is consistent with this level of return given subdued demand and little change in yields.

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The proposal to merge the two funds was developed by AUI, creating a $360 million property fund holding commercial properties in Sydney, Melbourne, Adelaide, Brisbane, Canberra, and Perth.
 
Mr Mark Pratt, AUI’s head of property, mortgage and capital markets, said investors strongly supported the proposal, with 89.8 per cent voting in favour.
 
“Australian Unity Funds Management, as the responsible entity, developed the proposal because it believes a merger of the two funds is in the best interests of SIT investors, as well as the existing investors in OPF.
 
“SIT was a closed-end syndicate that was due to terminate in June 2014. Through the merger we are providing investors an opportunity to maintain their exposure to quality commercial property investments, better diversify their property exposure, and have the opportunity to defer capital gains tax (CGT) on their investment.
 
“Having spoken with a number of investors, many of them expressed a desire to maintain their investment in the Australian property market beyond SIT’s scheduled termination,” Mr Pratt said.
 
As part of the proposal, investors in SIT will be offered an initial $5.7 million capped withdrawal offer equating to approximately 25 per cent of SIT’s forecast net asset value at the withdrawal offer date.  This is in addition to around 46 cents per unit already returned to SIT unitholders since December 2006.

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AUI proposes merger of property funds

Australian Unity Investments (AUI) is seeking approval from investors in its Second Industrial Trust (SIT) to merge the trust with its larger, more diversified Office Property Fund (OPF). OPF is AUI’s flagship office property fund.
 
Investors in SIT will be eligible to vote on the proposal, which intends to create a $360 million property fund currently holding commercial properties in Sydney, Melbourne, Adelaide, Brisbane, Canberra, and Perth.  Investors will be able to vote via proxy or by attending a general meeting of investors on Friday 24 May 2013 in Melbourne.
 
SIT is a fixed term trust due to terminate in 2014, which will own a single property in NSW currently valued at just over $29 million at the time of the merger if approved. AUI assumed management of SIT when it acquired Investa Funds Management Limited in September 2011.  OPF already owns eight properties throughout Australia.
 
Mr Mark Pratt, AUI’s head of property, mortgage and capital markets, said AUI has spent several months researching the options available for SIT.
 
“Australian Unity Funds Management Limited, as responsible entity, believes the proposal is in the best interests of investors in SIT.
 
“A number of investors in SIT have indicated to us they would like to maintain their investment in the Australian property market beyond SIT’s scheduled termination in June 2014.
 
“As well as allowing investors to maintain their exposure to quality commercial property investments, our analysis has shown the proposed merger would bring a number of benefits to investors, including a higher forecast distribution and total returns (over 2014 financial year compared to a continued investment in the Trust), and regular capped withdrawal opportunities currently unavailable through SIT.
 
“The proposal also provides diversification benefits, through investment in a fund that currently holds eight properties across Australia with a broader range of tenants than SIT.
 
“If investors vote in favour of the proposal, their investment will transfer to the OPF with the dollar value of their investment remaining unchanged at the implementation date,” Mr Pratt said.
 
If the proposal is approved, investors in SIT will be offered an initial $5.7 million capped withdrawal offer equating to approximately 25 per cent of SIT’s forecast net asset value at the withdrawal offer date.   They may also have the opportunity to defer any capital gains tax (CGT) on their investment by opting for scrip for scrip rollover relief.
 
Mr Pratt said bringing together investment vehicles is an approach AUI has used successfully in the past, for example when it converted five retail property syndicates and trusts into a single fund, the Australian Unity Retail Property Fund.
 
“Such an approach can give investors exposure to a number of quality, large-scale direct properties that their previous investment couldn’t provide. This greater diversification, compared to the existing SIT, is likely to improve cash flow stability and deliver greater access to capital to support future growth,” he said.

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Peter Lambden has been appointed to the role of head of property and asset management, where he will be responsible for reviewing all asset management activities and strategies for AUI’s property funds, and streamlining property and asset management processes across the portfolio.

Mr Lambden, who joined AUI in 2001, was previously head of diversified property funds.   He has over 40 years experience in property and portfolio management and has held senior property roles with AXA as well as working with both local and federal government.

Mr Lambden is a fellow of the Australian Property Institute and served as its state president for two years. He holds a diploma in business studies – valuations from RMIT and is a certified practising valuer.

Mark Lumby, previously head of office and industrial property funds, will now be head of property funds – retail, with responsibility for AUI’s unlisted property funds in the office, retail, and industrial sectors as well as its two diversified property funds. The new role will strengthen AUI’s focus on the retail and intermediated market, where Mr Lumby will work closely with head of healthcare and retirement funds, Chris Smith.

Mr Lumby joined AUI in 2011 from Investa Property Group, when AUI became the responsible entity for the Investa retail property funds. He has over 15 years experience in funds management including working at Stockland and Trafalgar Corporate Group.  Mr Lumby holds a bachelor degree in business from the University of Technology, Sydney.

Mark Pratt, general manager – property, mortgages and capital markets, said the changes further utilise the skills and experience of AUI’s property team, and enhances business focus on key areas of future growth.

“Our property funds business has grown significantly over the last few years and we continue to see opportunities for expansion.

“We are making these changes now to ensure we have the best possible expertise and knowledge to facilitate future growth and to take advantage of opportunities as they arise,” he said.

Peter Lambden has been appointed to the role of head of property and asset management, where he will be responsible for reviewing all asset management activities and strategies for AUI’s property funds, and streamlining property and asset management processes across the portfolio.

Mr Lambden, who joined AUI in 2001, was previously head of diversified property funds.   He has over 40 years experience in property and portfolio management and has held senior property roles with AXA as well as working with both local and federal government.

Mr Lambden is a fellow of the Australian Property Institute and served as its state president for two years. He holds a diploma in business studies – valuations from RMIT and is a certified practising valuer.

Mark Lumby, previously head of office and industrial property funds, will now be head of property funds – retail, with responsibility for AUI’s unlisted property funds in the office, retail, and industrial sectors as well as its two diversified property funds. The new role will strengthen AUI’s focus on the retail and intermediated market, where Mr Lumby will work closely with head of healthcare and retirement funds, Chris Smith.

Mr Lumby joined AUI in 2011 from Investa Property Group, when AUI became the responsible entity for the Investa retail property funds. He has over 15 years experience in funds management including working at Stockland and Trafalgar Corporate Group.  Mr Lumby holds a bachelor degree in business from the University of Technology, Sydney.

Mark Pratt, general manager – property, mortgages and capital markets, said the changes further utilise the skills and experience of AUI’s property team, and enhances business focus on key areas of future growth.

“Our property funds business has grown significantly over the last few years and we continue to see opportunities for expansion.

“We are making these changes now to ensure we have the best possible expertise and knowledge to facilitate future growth and to take advantage of opportunities as they arise,” he said.

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Shaun Thomas – BDM – AUI

Australian Unity Investments (AUI) has appointed Shaun Thomas as NSW and ACT business development manager. 

Mr Thomas joins AUI from HSBC Global Asset Management, where he was associate director – key accounts and research relationships.  He has also held client relationship and business development roles at Macquarie Funds Group, St George Margin Lending and Comsec Broking, as well as working as a financial adviser at Australian Financial Services. 

Mr Thomas is currently completing an MBA and holds a master of applied finance and investment from the Securities Institute of Australia, a graduate diploma of financial planning from the Investment Banking Institute, and a bachelor of commerce (economics and finance) from the University of Western Sydney. 

Michelle Hanger, national manager – adviser distribution at AUI, said that Mr Thomas brings an excellent understanding of the needs of financial advisers, and a strong network within the industry, to the role. 

“AUI continues to grow within the NSW and ACT region and Shaun has the experience and the skills to further enhance our distribution capabilities and reach. 

“We are particularly pleased to have recruited someone of his calibre and background to the role,” Ms Hanger said.

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The HYMT will start returning all remaining capital to investors through regular payments and Mr David Bryant, CEO of AUI, said that with 48% of the trust already returned to investors through periodic redemption facilities, AUI expects the remaining 52% to be returned progressively between now and late 2014, as assets in the fund mature.

“We believe this decision is in the best interests of all investors in this particular trust in light of the investment environment since the global financial crisis.

“The government’s bank deposit guarantee, seen as necessary because of the GFC, had the unfortunate side-effect of triggering a rush of withdrawals from mortgage funds, forcing most to freeze redemptions.

“Following this, we have continued to see persistent demand for liquidity from investors in the HYMT and, given continued rate of redemptions we believe that the most responsible action is to formally terminate the trust and return the balance of the capital to investors,” said Mr Bryant.

AUI will make an initial payment to investors before Christmas of approximately 10 percent of investors’ capital.  A second payment, of around five percent, will be made in March next year, and AUI expects to continue making regular payments on a six-monthly basis from September 2012. It anticipates that the fund will be fully closed by the end of 2014.

Mr Mark Pratt, general manager of property, mortgages and capital markets at AUI, said that despite winding down HYMT, AUI continues to believe mortgage funds have a role to play for investors looking for consistent income and regular access to their capital.

“The Mortgage Income Trust remains an important part of the investment portfolio of its investors, and given feedback from investors and lower levels of redemptions, this fund will continue under its current arrangements,” Mr Pratt said.

The Australian Unity Wholesale Mortgage Income Trust has returned 5.25% for the year ending 30 November 2011.

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As a result, Mr Stephen Alcorn has joined AUI as head of institutional, based in Sydney. Mr Alcorn has over 20 years financial services experience including business management and development, product development and consultant relations.  He was most recently deputy managing director at BNY Mellon Asset Management, and also held the roles of director, institutional business and head of consultant relations during his time with the firm.

Prior to this, Mr Alcorn held business development and marketing roles at Barclays Global Investors, GESB and Sonshine FM.  He holds a masters in commerce (finance and funds management) from the University of New South Wales and is a certified investment management analyst (CIMA).

Ms Kara Gilmartin, who was previously executive manager supporting the chief executive officer Mr David Bryant in business-wide and joint venture initiatives, has become head of joint ventures.  Ms Gilmartin has responsibility for managing the servicing, governance and distribution needs of AUI’s joint venture businesses.  Before joining Australian Unity, Ms Gilmartin was a senior legal counsel with Coles Myer and has a bachelor of law, commerce, business and business economics from Flinders University in South Australia.  

On the operational side of the business, Mr Peter Loosmore has joined as chief operating officer. Mr Loosmore brings 20 years industry experience in operational and finance roles to AUI.  This includes chief financial officer roles at Suncorp Group (life insurance and asset management), St George Bank (retail bank), Asgard Wealth Solutions and Rothschild Australia Asset Management; as well as management consulting roles with Deloitte. Mr Loosmore holds a bachelor of business from the University of Tasmania and is a member of the Institute of Chartered Accountants in Australia. 

Ms Leonie Pratt, previously AUI’s chief operating officer, has moved to the newly-created role of general manager – executive, where she will look after AUI’s corporate governance responsibilities including licenses and capital usage and give additional support on operational matters to Mr Bryant.  Ms Pratt has over 20 years financial services industry experience, including eight years at Intech in roles including head of institutional client services and head of investment operations.  She holds a bachelor of business, accounting and finance degree. 

Mr Bryant said that the business has been built on ensuring that it had the resources in place to manage anticipated growth. 

“Today, as a group with more than $11 billion in funds under management, our organisation is significantly more complex than it was five years ago, including an expanded product range, additional joint venture partners, and increasing governance and board responsibilities. 

“We have also undertaken several acquisitions, including the recent Investa retail property funds, the acquisition of the $400 million diversified property fund from Westpac last year, the merger with Lifeplan Funds Management in 2009, and we are currently progressing a proposed merger with Big Sky Credit Union. 

“The restructure and new appointments will further strengthen our business and ensure we can continue to achieve our business ambitions,” Mr Bryant said.

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