Aust Unity suspends property trust inflows

Australian Unitywill suspend inflows into its Healthcare Property Trust for up to six months as the fund has fallen victim to its own success according to the fund manager’s head of property Martin Hession.

“The fund has attracted significant inflows, but we have found it difficult to find suitable healthcare properties to invest in,” he says.

“We are working on a couple of deals at present and one is due to go into due diligence any day now, which means we could complete by June 30.”

Hession says there other deals that Australian Unity is waiting on, but they are subject to the development of the actual properties.

“The deals are in the pipeline, but we don’t have to invest until the buildings are completed - which could be in 12 months time,” he says.

The temporary suspension of inflows into the fund has been due to the cash reserves growing. Hession says the fund has about $20 million of cash reserves at present, with no investment opportunities.

“We have repaid a lot of bank debt, but when the fund was set up, there was no allocation for holding cash; it all had to be invested,” he says.

“If we keep the fund open, the problem will get worse and that will affect the returns of the existing investors.”

The December 31 return for the healthcare trust was 9.23 per cent and this has resulted in significant inflows during the last three months, Hession says.

“We cannot close the trust permanently so we are acting in the best interests of existing investors by helping to protect their future returns,” he says.

The trust owns seven private hospitals and two medical clinics located throughout Victoria, New South Wales and South Australia. It has $175 million of funds under management.