Introducing the Healthcare Property Trust The Healthcare Property Trust opened in 1999 to capitalise on Australia s ageing population and growing demands for healthcare. Over the last 13 years, the Trust has grown to become one of the largest and highest-rated unlisted property funds in Australia. Currently, it owns a quality portfolio of 24 individual properties across four Australian states, characterised by leases that are typically longer than most in the commercial property sector. Beleura Private Hospital, VIC
01. An ageing population 02. Growing need for healthcare services 03. A long-term investment opportunity in healthcare property Australia is ageing The percentage of Australians aged over 65 is rapidly increasing, and by 2056 is expected to make up between 23 and 25 per cent of the population. 1 Today, the fastest growing demographic in the Australian population is the over 65s. We will require more healthcare services Expectations are, by 2050, Government spending will increase in today s terms by around $60 billion. Two thirds of this increase would be attributable to health, reflecting pressures from ageing, along with increasing demand for health services and funding of new technologies. 2 An ageing population is more than just a demographic trend an increasingly older population also places extra demands on health services. 3 The rationale for investing in healthcare property can be as simple or as complicated as you like. But any way you add it up, the combination of long-term leases, quality tenants, rising demand and quality assets has meant the healthcare property sector has been one of the standout performers in the commercial property sector over recent years. In April 2013 the Grattan Institute found, over the past decade, in real terms, Australian Commonwealth and State governments spent an additional $43 billion on health. This increase, in addition to an ageing population, was due to Australians of all ages seeing doctors more often, having more tests and operations, and taking more prescription drugs. 4 1. Population Projections, Australian Bureau of Statistics, July 2011 2. Intergenerational Report 2010, Treasury of Commonwealth of Australia, 2010 3. Australia s Health 2010, Australian Institute of Health and Welfare, Canberra, 2010 4. Budget pressures on Australian governments, John Daley, Grattan Institute, April 2013 The Valley Hospital, VIC 02. Australian Unity Healthcare Property Trust
Australian Unity Healthcare Property Trust The Trust is an unlisted property trust that invests in healthcare-related property assets with a primary focus on delivering regular income to its investors, as well as the opportunity for long-term capital growth. The Trust has a diversified tenant base and currently comprises a quality direct portfolio of 24 healthcare properties across Australia, which together with its other assets, are valued at $474.50 million (31 March 2013). Healthcare property investment includes the ownership of the physical infrastructure supporting the Australian healthcare system, including the land, bricks and mortar of hospitals, medical clinics, nursing homes, day surgeries, consulting rooms, rehabilitation units, radiology and pathology centres. Importantly, while other investment and property sectors will experience the volatility of economic cycles, the demand for healthcare assets remains relatively steady. As a result, the Trust is an investment in a sector that is relatively immune to the impact of economic downturns. 170 years experience caring for Australians The Healthcare Property Trust brings together the Australian Unity Group s understanding of the healthcare sector as well as the investment management expertise and experience of our specialist property team. Australian Unity provides healthcare, financial planning, investment, and retirement living services to more than half a million Australians. Australian Unity s history as a trusted mutual organisation dates back 170 years. This combination means that we are uniquely qualified to manage healthcare property investments. Key benefits of the Trust Solid and reliable income paid quarterly. Potential for capital growth over the medium to long term. Access to a diverse range of 24 healthcare properties across four states VIC, NSW, SA and QLD. Flexibility to access your investment through a limited withdrawal facility. Committed, active management strategy. Our investment strategy Our investment decisions are premised on each asset s ability to deliver attractive returns, to increase the Trust s diversification and the asset s relative liquidity. We aim to achieve this by: acquiring healthcare or healthcare related properties that are leaders in their geographical area selectively developing suitable long-term expansion and/or improvement strategies for the properties ensuring diversification within the Trust, including by geographic location, property type and the type of healthcare services provided by each tenant building strong, secure relationships with tenants that have relevant experience and expertise in the healthcare sector, and seeking carefully structured, long-term leases, with the aim of providing stable and predictable rental income as well as rental growth over the long term. In addition, the Trust borrows to finance the purchase of new and existing assets and to develop and maintain its assets. It generally operates within a gearing ratio range of 30 50 per cent, but may operate outside of this range if we believe it is in the interest of investors to do so. Who should invest in the Trust? This Trust is typically suited to investors who: seek regular income payments want a high degree of direct property exposure are looking to diversify their existing property portfolio, and have at least a five-year investment outlook. Ratings summary Since inception in February 2002, the Wholesale Units in the Trust has delivered enviable total return of 11.67% p.a. to 31 March 2013. 1 1. Retail Units were first offered in June 1999 and have delivered a total return since inception of 10.54% p.a. to 31 March 2013. Class A Units were first offered in February 2009 and have delivered a total return since inception of 5.15% p.a. to 31 March 2013. Past performance is not a reliable indicator of future performance. 01. Australian Unity Healthcare Property Trust
A snapshot of the Trust s direct property portfolio Wakefield Private Hospital, SA Mackay Medical Centre, QLD RPAH Medical Centre, NSW NSW RPAH Medical Centre (Primary tenant: S & K Car Park, Book value: $48.54m) Figtree Private Hospital (Tenant: Ramsay Health, Book value: $20.26m) Constitution Hill Aged Care (Tenant: Australian Unity Care Services, Book value: $14.25m) IVF Australia Clinic (Tenant: IVF Australia, Book value: $12.17m) Hunters Hill Private Hospital (Tenant: Ramsay Health, Book value: $12.01m) Berkeley Vale Private Hospital (Tenant: Ramsay Health, Book value: $12.00m) Forest Road, Orange 1 (Development site, Book value: $6.01m) Figtree Consulting Suites (Primary tenant: Shelley & Sumbut Namcharon, Book value: $1.20m) Victoria Peninsula Private Hospital (Tenant: Ramsay Health, Book value: $60.01m) Beleura Private Hospital & Beleura Clinic (Tenant: Ramsay Health, Book value: $44.26m) The Valley Private Hospital (Tenant: Healthe Care, Book value: $42.63m) Manningham Medical Centre (Primary tenant: MMC General Practice, Book value: $30.34m) Brunswick Private Hospital & Brunswick House (Tenant: Healthe Care, Book value: $22.17m) Eureka Medical Centre (Tenant: Primary Health, Book value: $4.00m) Peninsula Vacant Land (Development site, Book value: $0.96m) Queensland Ipswich Medical Centre & Day Surgery (Primary tenant: Ipswich Day Surgery, Book value: $10.51m) Mackay Medical Centre 2 (Primary tenant: Queensland Fertility Group, Book value: $10.05m) South Australia Beleura Private Hospital, VIC Wakefield Private Hospital (Tenant: Calvary Health, Book value: $55.16m) Wakefield Medical Clinic (Tenant: Calvary Health, Book value: $14.22m) College Grove Rehabilitation Hospital (Tenant: Calvary Health, Book value: $14.51m) 285 Flinders St, Adelaide (Tenant: Adelaide Respiratory Specialists, Book value: $1.33m) 10 North East Road, Walkerville (Tenant: Residential, Book value: $0.67m) 12 View Road, Walkerville 3 (Tenant: Eagles & Karger, Book value: $0.80m) All valuations current as at 31 March 2013. 1. This property is currently being marketed for sale. 2. Includes a parcel of vacant land, 1-3 Discovery Lane, North Mackay valued at $0.75 million as at February 2013. 3. Property adjoining College Grove Rehabilitation Hospital. 03. Australian Unity Healthcare Property Trust
A question of correlation healthcare property stands alone Correlation is a measure of how much something moves or reacts in relation to something else. When structuring a client s asset allocation it is important to consider how the performance of a particular investment correlates with (or against) both other investment markets and the broader industry in which it operates. In a nutshell, the healthcare property sector is different to other types of property investments. Research from IPD, in conjunction with the Property Council of Australia, has found that the healthcare property sector has the lowest correlations with other property sectors. This can make healthcare property a desirable addition to a diversified property portfolio. The chart from IPD research below shows the total return for quarterly periods from June 2005 to 31 December 2012 for five different property sectors, including Office, Retail, Industrial, Healthcare and All Property sectors. The impact of the global financial crisis on commercial property was striking. Certainly, healthcare property wasn t immune, but its impact was muted when compared to the other commercial property sectors. Reasons for the strength and stability of the healthcare property sector are that its properties are relatively scarce, the industry is highly regulated and its properties are typically leased for very long terms to large, stable and well-resourced operators. At some stage in their lives, practically every Australian will seek care at a hospital or medical centre. As well, over the past several decades, the number and proportion of the population aged 65 years and over has risen considerably. This will have the combined effect of increasing the burden on our health services because, as people get older, it is more likely they will need to seek healthcare services more often. 25 20 15 10 5 0-5 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12-10 -15 All Property Index Retail Property Index Office Property Index Industrial Property Index Healthcare Property Index Source: IPD Research As you can see, there is a broad and generally strong correlation between four of the property sectors. However, the healthcare sector shows a relatively low correlation, highlighting its distinctive performance characteristics. Peninsula Private Hospital, VIC 04. Australian Unity Healthcare Property Trust
Find out more about the Healthcare Property Trust Peninsula Private Hospital, VIC Contact us Address Investor Services 13 29 39 Adviser Services 1800 649 033 Website Email 114 Albert Road South Melbourne, VIC 3205 australianunityinvestments.com.au investments@australianunity.com.au Important Information This investment product is issued by Australian Unity Funds Management Limited ABN 60 071 497 115, AFS Licence No. 234454. The information in this document is general information only and is not based on the financial objectives, situations or needs of any particular investor. In deciding whether to acquire, hold or dispose of the product, you should obtain the current Product Disclosure Statement (PDS) dated 17 April 2012 and consider whether the product is appropriate for you. A copy of the current PDS is available at australianunityinvestments.com.au by calling our Investor Services on 13 29 39. Investment decisions should not be made upon the basis of its past performance or distribution rate, since future returns will vary. The information provided in the document is current as at the time of publication. The Lonsec rating (assigned May 2013) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 685 561 AFSL 421445. The rating is a class service (as defined in the Financial Advisers Act 2008 (NZ)) or is limited to General Advice and based solely on consideration of the investment merits of the financial product(s). In New Zealand it must only be provided to Wholesale clients (as defined in the Financial Advisers Act 2008(NZ)). It is not a recommendation to purchase, sell or hold the relevant product(s), and you should seek independent financial advice before investing in this product(s). The rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the Fund Manager for researching the product(s) using comprehensive and objective criteria. SQM Research is an investment research firm that undertakes research on investment products exclusively for its wholesale clients, utilising a proprietary review and star rating system. Information in this advertisement attributable to SQM Research must not be used to make an investment decision. The SQM Research rating is valid at the time of publication, however it may change at any time. While the information contained in the rating is believed to be reliable, its completeness and accuracy is not guaranteed. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person s particular circumstances or needs. You should read the Product Disclosure Statement and consult a licensed financial adviser before making an investment decision in relation to this investment product. The Zeneth Investment Partners ( Zeneth ) ABN 60 322 047 314 rating (assigned <month year>) referred to in this document is limited to General Advice (as defined by section 766B of Corporations Act 2001) and based solely on the assessment of the investment merits of the financial product on this basis. It is not a specific recommendation to purchase, sell or hold the relevant product(s), and Zenith advises that individual investors should seek their own independent financial advice before investing in this product. The rating is subject to change without notice and Zenith has no obligation to update this document following publication. Zenith usually receives a fee for rating the fund manager and product against accepted criteria considered comprehensive and objective.