HEATHLEY AGED CARE PROPERTY FUND No. 1 - ARSN 606 707 055

The Opportunity

The Heathley Aged Care Property Fund provides an opportunity to invest in a high income yielding investment that is backed by the strong fundamentals of Australia’s high care aged care sector.

• The Fund has initially invested in 5 high-care aged care properties totalling over $50M;
• Income is underpinned by new 20 year leases to an institutionally backed operator;
• Distribution yields for investors start from 8.0% per annum (FY17 forecast) paid quarterly with expected continual annual income growth.
• The Fund will acquire further leased high care aged care properties that meet the strict investment criteria, up to a total value of $200M.

The opportunity provides a stable inflationary hedged income backed by full net leases (tenant pays for all property outgoings) with fixed annual rental increases (minimum annual increase of 2.75%). This ensures stability

of income to investors in a resilient, non-cyclical sector reliant on non-discretionary spending and experiencing rapid underlying demand growth.

Further to providing a stable level of income, we believe there are attractive capital growth prospects driven by the following market forces:

• Increasing undersupply of high care aged care facilities driven by a rapidly growing population of people over the age of 85, high barriers to entry for new operators in the sector and scarcity of well-located suitable metropolitan aged care facility sites;
• Increased market transactional activity as the competitive landscape in the aged care sector continues to grow and operators look to capitalise for expansion (expected to drive further sale and lease back transactions and investment yield compression);

• The Fund’s creation of a unique portfolio of scale ($200M) attracting institutional investment as an exit;
• The Fund’s exclusive access to further de-risked brownfield development (existing assets have potential for extensions and refurbishment which is currently being undertaken to improve their value by a minimum of $20M).

Investment Strategy

The Manager intends to build a portfolio up to the value of $200 million, and manage the Properties with the aim of providing Investors with a stable income return and the potential for capital growth.

All Properties will be assessed by the Manager in accordance with the Fund’s investment criteria prior to inclusion in the Portfolio.

To achieve the Investment Strategy, the Manager will aim to acquire Properties which are diversified by operator and location, with long term leases in place, and multiple exit strategies.

Investment Rationale

The Fund provides an exciting opportunity to access the growth in the ageing population. The residential aged care sector is a growing part of the provision of health care services in Australia, with a number of attractive drivers, including:

• an increasing number of elderly citizens, driven by increased life expectancy and the ageing of the ‘baby boomer’ generation;
• high barriers to entry and the low threat of substitutes;
• attractive and sustainable government funding, with approximately 69% of revenue currently being provided by the Federal government; and
• strong operator occupancy rates, with industry wide rates of >92% for the past 15+ years.

Residential Aged Care Market

Australian residential aged care is a $14 billion industry, catering for people who can no longer live independently due to health reasons, or who require care. People typically move into residential aged care at the point when they require a level of clinical care that can no longer be provided in their own home.

Fund Structure

A three year Investment Period followed by a five year Portfolio Management Period

The Fund has a Target Investment Term of up to eight (8) years which commenced in October 2015. The Target Investment Term comprises:

• an Investment Period of up to three (3) years, during which the Fund will target to acquire Properties up to the value of $200 million. The Fund will continue to raise equity for the duration of the Investment Period, until the target value of $200 million is achieved; and
• a Portfolio Management Period of up to five (5) years, during which the Properties will be actively managed. Prior to the completion of the Target Investment Term, the Manager will either recommend to Investors that the Fund dispose of the Properties within, or as soon as practicable following the Target Investment Term or, subject to Investor approval by Special Resolution, extend the Fund for a further period of up to two (2) years. Any extension will require approval by a Special Resolution of Investors.

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Disclaimer

CrowdfundUP Pty Ltd (ACN 166 872 484) (“CrowdfundUP”) is not responsible for, or the issuer of, the Product Disclosure Statement accessible at the link above (“PDS”). Investors should consider the PDS before making any decision regarding any investment outlined in the PDS. CrowdfundUP makes no representation or warranty as to the accuracy or completeness, or any other aspect, of the PDS. CrowdfundUP will not be liable in relation to any investment decision in relation to the PDS. CrowdfundUP is an authorised representative of Big Start Pty Ltd (ABN 87 162 024 866) AFSL no. 474592. To the extent (if any) that anything on this website (including this page) constitutes advice, it is general advice and CrowdfundUP provides such advice as authorised representative of Big Start Pty Ltd.

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A Product Disclosure Statement for this particular financial product is available and can be obtained by clicking the download link in the below attachments section.

An individual should consider the Product Disclosure Statement in deciding whether to acquire, or to continue to hold, the particular product outlined in the PDS.

Attachments

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