Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Barwon Healthcare Fund ‘Recommended’ by Zenith
Barwon Investment Partners this week announced that their long-standing Healthcare Property Fund had received a ‘recommended’ rating from independent research house Zenith Investment Partners. The group, named after the Barwon River in Sydney and founded in 2006, has built a niche assisting wholesale and institutional investors and now manages over AU$1.5 billion in assets.
The fund, established in 2014, was assessed as being higher quality due to the expanding team of 17 investment professionals at Barwon, and the differentiated, specialist and single sector focus of the team. One of six founding partners, Rob Morrison, heads up the property team, which has now transacted on over $1.0 billion across 50 assets since its inception.
Recent announcements by the Reserve Bank of Australia that the cash rate will remain on hold until at least 2024 has seen the ‘search for yield’ once again accelerate, but particularly into residential property. Focusing only on healthcare properties including private consulting, hospitals, day surgeries, medical centres and laboratory facilities, the strategy may offer a unique differentiating point for yield starved investors.
Over the 12 months to 31 December the fund delivered a return of 10.51 per cent of which 6.44 per cent came from income, via rental payments, and the remaining 4.08 per cent in capital growth. Since inception, income is slightly higher at 7.0% per annum. 2020 offered evidence of the resilience of the healthcare sector and quality of tenants, with collections exceeding 95 per cent and rental payments generally ‘accrued’ rather than waived as they were in the office and retail sectors.
According to the 31 December report, the wholesale portfolio includes 35 properties, valued at $344 million, split across 94 tenants and an average lease maturity of 6.8 yields. 17 per cent of tenants are State Government health providers, 15 per cent are ASX listed and several are private, large scale operators. Leverage is just 30 per cent of the portfolio and the fund opens intermittently for capital raisings.
