Australian Unity Funds Management Limited (AUFM) is developing a proposal to list its Australian Unity Office Property Fund (Fund) on the ASX, subject to approval by AUFM’s Board of Directors and the Fund’s unitholders, in order to support long-term growth of the Fund.
The Fund is an income-based, unlisted property fund established in 2005 which owns a portfolio of eight office assets in New South Wales, Victoria, Australian Capital Territory, South Australia and Queensland, with assets valued at $365 million (as at 31 March 2015).
It is intended that a proposal will be issued to investors to allow them to consider listing the Fund and, at the same time, making a withdrawal offer prior to any listing.
Subject to approval by AUFM’s Board of Directors, a Notice of Meeting and an Explanatory Memorandum will be issued to Fund investors later in 2015.
Mark Pratt, general manager of Australian Unity Real Estate Investment, said the proposed listing will allow the Fund to grow by accessing additional public capital markets.
“We have considered several options for the Fund and believe that developing a proposal for an ASX listing will be in the best interest of existing investors, particularly around improved access to capital providing greater capacity for further growth and maximising returns. It also aims to provide liquidity for investors who wish to exit their investment.
“In the meantime, the Fund will continue to be managed for the benefit of all investors while the proposal is developed. This includes maintaining regular quarterly distributions and making bi-annual capped withdrawal offers.
“Until the proposal is finalised, the Fund’s product disclosure statement has been temporarily withdrawn. This means that new applications cannot be made but the distribution reinvestment plan will continue to operate for those investors who have made that selection.”
Mr Pratt said the Fund’s portfolio of properties has solid characteristics that are highly sought after, including:
Strong tenant profile – nearly 60% of the income is derived from tenants with at least an investment grade credit rating (eg Telstra, NSW State Government, GE)
Geographic diversification – exposure to most Australian states with 44% allocated to the service orientated state of NSW and no exposure to the weakening WA economy
Solid lease expiry profile
Structural rental increases – most leases have contracted annual rental increases; and
Balanced portfolio – the Fund has a mix of single (or dominant) tenanted properties on long-term leases (which are highly sought after in the direct property market) and multi-tenanted properties (which creates opportunities to add to the Fund’s earnings profile).
“The portfolio is solid and, in its current form, is driving a competitive distribution yield for investors,” Mr Pratt said.
Australian Unity Real Estate Investment is the property funds management business of Australian Unity Investments, part of the Australian Unity group, a national healthcare, financial services and retirement living organisation that has been operating for more than 175 years.
AUREI was established in 1998 and, through its unlisted property funds, owns and manages more than 50 properties in the healthcare, retail and commercial sectors across Australia. Its value proposition includes combining its investment expertise with the insights from the broader Australian Unity Group and providing a deeper perspective that is delivered in a straightforward and transparent way.
AUREI has more than $1.8 billion in funds under management (as at 31 May 2015).
Should the Board of Directors approve a process to put the proposal to investors, a new product disclosure statement for the Fund will need to be issued prior to any offer of units in connection with the listing of the Fund on the ASX. Investors will need to consider this new product disclosure statement before deciding whether to acquire, or continue to hold, units in connection with any subsequent offer of units or withdrawal offer. The new product disclosure statement will be available from Australian Unity’s website or in hard copy upon request from its Investor Services Team.
For more information please contact:
Mr Mark Pratt
General Manager, Real Estate Investments
Phone: 03 8682 4448