AUI: Property fund receives ‘Recommended’ rating

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Research house Lonsec has upgraded the Australian Unity Property Income Fund (“Fund”) to a ‘Recommended’ rating.

“The ‘Recommended’ rating indicates Lonsec has a strong conviction the financial product can generate risk adjusted returns in line with relevant objectives. The financial product is considered an appropriate entry point to this asset class or strategy,” Lonsec said.

Established in 1999, the Fund invests in a diverse mix of commercial property investments including direct assets, unlisted funds and listed property securities.

Mr Ryan Banting, head of portfolio management with Australian Unity Real Estate Investment, says the new rating is timely as the current low interest rate environment has seen many investors re-evaluating their income producing investment options. 

“Since its inception, the Fund has provided regular and consistent income distributions, low volatility and daily liquidity. In line with its ‘no surprises’ and risk-aware investment approach, the Fund delivered an income distribution yield of 8.55% for the 12 months to 31 May 2015,”  Mr Banting said. 

“The Fund is suitable for accumulators with modest balances, investors using a ‘core and satellite’ approach, and retirees in draw down phase.

“Importantly, by not borrowing to invest, the Fund eradicates portfolio risks of lending covenant breaches, negative interest rate movements or refinancing difficulties,” Mr Banting said.

The Lonsec report “noted positively that over longer time periods, the Fund has displayed strong defensive and low risk characteristics” and “has tended to outperform more often in down markets”. Importantly, the report also identified Australian Unity Real Estate Investment as “a well-regarded, experienced and conservative investment team”. 

It is “one of a small number of non-institutional unlisted property fund managers that came through the global financial crisis without reputational damage,” Lonsec stated.

“The Fund benefits from an experienced property team providing exposure to a portfolio of diversified property assets. The Fund’s rating is underpinned by Lonsec’s positive regard for the conservatism and experience of the Fund’s investment team. Further, historically the Fund has displayed lower worst drawdowns, lower levels of volatility and better liquidity than peers.

“Over seven years to February 2015, the Fund’s volatility (as measured by standard deviation) was a low 4.84 per cent p.a. with a worst drawdown of 15.41 per cent,” Lonsec 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).


For further information please contact:
Mr Ryan Banting
Phone: 03 8682 4566