Social infrastructure fund rated Recommended as step-down care demand grows

Alternative real assets have become a familiar part of the property conversation with wholesale clients, as advisers look beyond office and retail towards sectors where occupier demand rests on lasting social need. Purpose-built accommodation for people with high physical support needs is one of those sectors, and demand for high quality places continues to outpace supply.

Independent research house Core Property Research has reviewed the ASA Equal Living Social Infrastructure Fund, the newest offering from ASA Real Estate Partners, and rated it Recommended.

The rating takes into account the strength of the fund’s management team and its independently valued assets, giving advisers an independent view of an opportunity in a specialised corner of the property market.

The opportunity

Managing partner Tim Slattery sees the fund’s assets as part of the answer to a persistent pressure point in the health system. Bed block occurs when patients who no longer need acute care remain in hospital. There is nowhere suitable for them to go. That in turn limits the beds available to others.

“The assets we are investing in address the very real problem of bed block in Australia’s hospitals with an estimated 10% of hospital beds impacted,” Slattery said.

He sees a precedent for the opportunity in an earlier cycle. “We see a distinct parallel to healthcare real estate coming out of the global financial crisis in 2010 which was a very profitable investment.”

The fund

ASA Real Estate Partners has opened the fund to wholesale investors. It is raising $50 million of initial equity. The money will go towards acquiring three newly completed assets in Dandenong, Preston and Werribee in metropolitan Melbourne.

The properties are leased to the Equal Living Group on up to 20 year triple net leases indexed annually to CPI. Under a triple net lease, the tenant meets outgoings such as rates, insurance and maintenance.

The assets provide ‘step down’ healthcare accommodation for Australians with life-changing injuries and conditions. These are people who cannot live long term in hospital. They also need care such that they cannot live at home.

The people receiving care include members of the community who have suffered strokes, acquired brain injuries, motor neurone disease and multiple sclerosis. Others have suffered major physical trauma, including quadriplegia and paraplegia.

Each site combines long term places with short and medium term places and ground-floor allied health suites. The Equal Living Group, a federally registered NDIS provider, operates each one.

The rating

Core Property scored the fund four out of five stars for both management quality and asset quality. Having reviewed the management team, the research house considered “it has the relevant skills and experience to operate the Fund successfully”.

That team brings a long history in listed property. Chris Aylward, Tim Slattery and Alex Abell founded ASA Real Estate Partners in 2023. They are the former chair, chief executive and senior executive of ASX listed APN Property Group. Dexus acquired APN in 2021.

The Melbourne-based firm manages $575.6 million across six properties in three states. ASA Funds Management, which has a majority independent board, manages its funds.

Independent valuers have valued the three assets at a combined $50.7 million. Core Property found the manager’s assumptions to be “in line with current market metrics and independent valuations”. The research house also placed the fund’s management fee at the low end of the range it sees across unlisted property funds.

The report is also clear about the fund’s characteristics. Core Property notes that investors should consider the fund illiquid. It also notes that the fund suits investors with a moderately high risk appetite. It relies on the Equal Living Group continuing to run its business well.

For Slattery, the sector fits squarely within the firm’s broader approach to property. “We really like alternative real asset sectors where the fundamentals of underlying occupier demand and clean cash flow are key value drivers,” he said.