Australian Unity raised $291 million to purchase six aged care properties and develop existing healthcare facilities in Melbourne and Brisbane.
This adds to their $2 billion Healthcare Property Trust’s portfolio of 55 healthcare-related property assets that include hospitals, medical centres and aged care facilities.
The new properties located in south-east Queensland and Cairns would be leased to Infinite Care for 25 years who were also given a loan to fit out the properties by the unlisted healthcare REIT.
Australian Unity head of healthcare property Chris Smith said they raised the funds from new and existing investors and they have a development pipeline of some $675 million.
Projects include the $390m Surgical, Treatment And Rehabilitation Service in Herston, Queensland, a $28 million upgrade to Peninsula Private Hospital in Langwarrin, Victoria and a $22 million expansion at Beluera Private Hospital in Mornington, Victoria.
“Our current and future developments enable us to put in place long-term leases with committed tenants that provide vital services to the community and a clear pathway to consistent returns for investors,” Smith said.
In the last five years unlisted property delivered annualised returns of 21 per cent, according to data released by Zenith Investment Partners, MSCI, the Property Funds Association and the Property Council of Australia.
Australian Unity head of commercial property Mark Lumby said the low-cash environment continued to underpin momentum for capital seeking assets with attractive yields.
“Looking ahead, we expect any further interest rate cuts to position property favourably compared to other asset classes like cash and fixed interest,” he said.
“As commercial properties generally have medium-to-long term leases which are indexed every year to CPI or have fixed increases in place, the sustainability of income from property becomes more attractive to investors.”
Australian equity markets delivered an annual return of 13 per cent with A-REITS returning 15.7 per cent, global equities dropping 1.9 per cent and cash dipping to 1.9 per cent over the same period.