The Heathley Direct Medical Fund responds to Heathley's thematic investment approach, aimed at providing investors with an attractive and stable level of income from property that will benefit from the unique and growing demand drivers of the heathcare sector.

The Fund has a strict mandate to invest ...

The Heathley Direct Medical Fund responds to Heathley's thematic investment approach, aimed at providing investors with an attractive and stable level of income from property that will benefit from the unique and growing demand drivers of the heathcare sector.

The Fund has a strict mandate to invest in the following three property types:

• GP anchored medical centres,
• Small private hospitals, and
• Specialist centres (i.e. day surgeries).

The Fund has invested in 11 medical properties totalling over $80M that are 100% leased on long term leases to over 20 blue chip medical operators (Sonic Healthcare, Healthscope, St Vincent’s, Pulse etc…). The fund intends to grow to $150M with targeted selection of well leased medical property over the remainder of 2016.

Broadly, the Fund targets the following key objectives:

• An attractive forecast net income return starting from 8.0% per annum (paid quarterly) with fixed rental income growth and added benefit of very high tax deferral;
• Targeted property selection into primary health and specialist based medical properties, which are expected to see highest sector demand growth over time (specifically multi-tenanted GP anchored medical centres up to day surgery anchored specialist centres);
• Low risk of income volatility with blue chip national and global healthcare businesses in occupation - i.e. businesses reliant on non-discretionary spending in a non-cyclical environment;
• Multiple exit options, including unique portfolio sale targeting institutional investment, at a time when both investor and tenant demand is forecast to have increased. Creation of such a portfolio is expected to generate a significant premium and therefore enhanced capital growth for investors.

Following the Investment Period, it is the intention of the Manager to hold the portfolio for a period of up to five (5) years (Portfolio Management Period). During the Portfolio Management Period the Manager will position the portfolio for sale with the intention of returning capital and the potential for attractive capital growth to investors.

This single Property located at 20-22 Mons Road, Westmead NSW was purchased in June 2014 as a recently developed, high quality medical office building central to Westmead’s health precinct. It provides total lettable area of 2,898 square metres together with basement and rear car parking for 63 vehi...

This single Property located at 20-22 Mons Road, Westmead NSW was purchased in June 2014 as a recently developed, high quality medical office building central to Westmead’s health precinct. It provides total lettable area of 2,898 square metres together with basement and rear car parking for 63 vehicles in an ideal medical use location. Westmead is a thriving medical precinct comprising the largest concentration of health services in the country. It includes four hospitals and three medical research institutes, all of which have grown rapidly in recent times.

The Property, when purchased, was approximately 80% leased (by area) to the following two blue-chip, ASX-listed companies on long term leases:

Castlereagh Imaging (Sonic Healthcare Ltd) until 11 April 2025 (49.2% by area); and

IVF Australia (Virtus Health Ltd) until 28 March 2020 (30.2% by area).

The property was purchased with a WALE of 7.8 years, and a vacancy of approximately 20% (by area). Since the property was purchased Management has been successful in reducing that vacancy to 7.3% by attracting two further high quality tenants, including Ramsay Healthcare to the property.

Heathley selected the Property given the following:

strong lease covenants tied to the healthcare sector – Castlereagh Imaging, the anchor tenant, is a subsidiary of Sonic Healthcare Limited (market capitalisation $6.7 billion);

strategic location – central within the Westmead health precinct, Australia’s largest concentration of hospitals, health services and health research facilities;

robust weighted average lease expiry profile

quality build – the building is a modern concrete framed structure with attractive facade, extensive natural lighting and functional and adaptable floor plates;

strong tenant financial commitment to the premises – both Castlereagh Imaging and IVF Australia have invested significant capital into their tenancies, in the form of specialised fitout and the housing of highly specialised laboratory and medical equipment;

attractive car park ratio of 1:45 (63 car parks to 2,898 square metres of lettable area) – the Westmead locality is a location that currently has a lack of available car parking; and

high proportion of tax deferred income – the income was 100% tax deferred for FY 15, with continued benefits throughout the Fund term.

The Fund provides Unitholders with sustainable, tax effective income returns. The pre-tax return on equity to Unitholders was 8.69% for FY 15.

The Heathley Keystone Property Fund No. 31 was established in 2013 as a closed-end, single property, unlisted direct property fund with its only investment being the property located at 156 - 160 Grafton Street, Cairns, Queensland. The property provides 2,468 sqm of lettable area 100% leased to high...

The Heathley Keystone Property Fund No. 31 was established in 2013 as a closed-end, single property, unlisted direct property fund with its only investment being the property located at 156 - 160 Grafton Street, Cairns, Queensland. The property provides 2,468 sqm of lettable area 100% leased to high quality medical tenants in the hospital precinct of Cairns within 500 metres of the Cairns Base Hospital, Ramsay Private Hospital and Cairns CBD.

Heathley selected the Property given the following:

• Investment with long term leases to Ramsay Health Care Pty Ltd, (an ASX Top 50 Company) expiring in May 2022 and QML Pathology, one of Queensland’s largest pathology businesses expiring in May 2017
• Weighted Average Lease Expiry (WALE) profile of seven years and eight months by income from 1 July 2013
• Initial forecast net income return to investors of 10.0% p.a. for the first two financial years

The Fund’s term has a term of five years, subject to approval by Special Resolution of Unitholders and commenced with a Loan to Value Ratio (LVR) target of no greater than 45%.

The fund currently returns a net annual income of 10.25% to investors. It was revalued in early 2015 which resulted in a lift of the unit value of $1.21 per unit against the issue price in 2013 of $1.00.