Investors in the Australian Unity Diversified Property Fund have voted in favour of a proposal to amend the Fund’s Constitution that will enable a Capital Raising Period of up to 12 months.
The Fund is an unlisted property fund, which owns a portfolio of 12 commercial property assets, and is valued at $256.09 million (30 June 2015).
From 3 September 2015, new Class A Units in the Fund will be offered at a 5 per cent discount to the net asset value (NAV) per unit.
The Capital Raising Period is expected to remain open for up to 12 months and all money raised by issuing new Class A Units will be used to fund redemptions sought under a Special Withdrawal Facility for existing investors.
Mr Mark Lumby, head of property funds – retail at Australian Unity Real Estate Investment, said investors overwhelmingly supported the two resolutions that were put to the recent unitholder meeting: more than 99 per cent of investors voted in favour of the first resolution to establish a Special Withdrawal Facility, capped at $50 million, which will be funded by applications for new Class A Units issued during the Capital Raising Period of up to 12 months.
In addition, approximately 99 per cent of investors voted in favour of a second resolution to enable the Responsible Entity to allow a full redemption of a deceased Member’s account after the Capital Raising Period has expired and at a time when the Fund’s usual bi-annual withdrawal offers are made.
Mr Lumby said the resolutions will assist Australian Unity Real Estate Investment to meet the following objectives:
maintain the quality and diversification of the assets for the longer term performance of the Fund;
provide liquidity to those investors who wish to withdraw some or all of their investment in the Fund; and
support the long-term sustainable growth of the Fund by making it more attractive to new investors over the longer term.
“Importantly, the changes to the Fund’s Constitution will enable Australian Unity to continue to manage the Fund in accordance with its investment strategy,” Mr Lumby said.
“This is a continuation of the long-term strategy first put in place for the Fund in 2010, when Australian Unity became the responsible entity. This strategy has involved repositioning the Fund to increase its diversification, to actively manage its assets and increase their value over time and, importantly, to provide investors access to their capital following a significant period of inaccessibility.
“To date, the combination of reinvesting capital into the Fund’s assets and providing capped withdrawal offers has predominately been funded through a combination of retained earnings, borrowings and sale of properties. This was unsustainable if the Fund was to meet its objective as a diversified property fund.
“With the approval to change its Constitution, the Fund is now in a better position to raise capital and meet investor liquidity requirements, while also enhancing the longer term outlook for existing and new investors.”
Mr Lumby said raising equity at a discount to fund withdrawal requests provides a greater level of liquidity to those investors electing to exit their investment than the current capped withdrawal offer.
“For those participating in the discounted equity raising, the forecast distribution yield will be higher than normal for a period of time for every dollar invested, as the buy price will be 5 per cent lower than NAV per unit.
“Importantly, for those investors not participating in the special withdrawal facility, the proposal is not dilutive to the value of their investment in the Fund and provides an avenue for the longer term sustainable growth of the Fund,” Mr Lumby 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.