ASA launches $250m social infra fund

ASA Real Estate Partners has launched a social infrastructure fund for select wholesale investors, with a target to raise $250 million over a five-year fund term.

The ASA Equal Living Social Infrastructure Fund is raising $50 million of initial equity, and ASA Real Estate Partners together with Equal Living Group will co-invest up to 10% of the equity in it.

The assets provide 'step down' healthcare accommodation for Australians with life-changing injuries - those who cannot live long term in hospital but equally need care such that they can't live at home.

The initial portfolio will comprise three newly completed assets in metropolitan Melbourne, 100% leased to the Equal Living Group on 20-year triple net leases indexed to annual inflation.

The assets are operated by Equal Living Group and are designed for long term government funding programs including the National Disability Insurance Scheme (NDIS).

ASA Real Estate Partners managing partner Tim Slattery said: "We really like alternate real asset sectors where the fundamentals of underlying occupier demand and clean cash flow are key value drivers."

The fund is targeting a distribution yield of 7% per annum and an 18% total return across the real estate as well as the equity participation in the Equal Living Group.

ASA said people being cared for include members of community who have suffered strokes, acquired brain injuries, motor neurone disease, multiple sclerosis and major physical trauma including quadriplegia and paraplegia.

Industry estimates indicate a significant shortage of high-quality accommodation with a further 10,000 beds required by 2033.

"Here we see the potential for the asset class which is emerging and not yet supported or priced by institutional capital - we see a distinct parallel to healthcare real estate coming out of the global financial crisis in 2010 which was a very profitable investment. Great assets, profitable tenants and priced without significant competitive tension," Slattery said.

"The structure of the investment gives us ownership of the hard assets as well as upside equity participation of up to 30% in our partner and tenant, an established business with over 150 staff, a proven and profitable operational track record and over 25 years of relevant experience."

ASA said private sector delivery of these assets and services is highly cost effective compared to relevant alternatives. The private sector can build and run this accommodation at up to 70% less than the equivalent nightly cost to government of an acute hospital bed, it added.

"The NDIS, at its core, was designed to provide critical support and essential accommodation for vulnerable members of the community," Slattery said.

"These assets do that in a very cost-effective manner for the government - as evidenced by the fact that only about 1% of the annual NDIS budget is utilised to care for these people who need lifelong support."