Vesta Medical Property Fund
VES1
Lead Manager
Minimum Investment
A$20,000
Offer Details
Issue Price (Per Share)
A$1.000
Offer Size
A$20,000,000
Shares Available
20,000,000
Item
Description
Responsible Entity
Macro Capital Limited (ACN 145 321 928)
Manager
Vesta Capital Management Pty Ltd (ACN 656 601 357)
Investment Type
The Fund is a closed ended registered managed investment scheme investing in up to three separate properties.
Target Subscription Amount
Target $20,000,000
Minimum Subscription
Minimum subscription is $13,200,000. The Minimum Subscription will enable the settlement of the Halls Head Property and Midland Property.
Minimum Investment
$20,000 or such lesser amount as the Responsible Entity may accept in its discretion.
Issue Date
Units under this Offer are expected to be issued when the Minimum Investment Conditions are satisfied.
Investment Term and Liquidity
The initial term of the Fund is 6 years from the Issue Date. If the Properties are not sold, or a sales process commenced, prior to the sixth anniversary, the term of the Fund may be extended by a Special Resolution of Unitholders. The Fund is an illiquid investment. The Responsible Entity does not intend to offer redemption opportunities to Unitholders prior to the sale of the Properties and the winding up of the Fund.
Risks
Unitholders will be exposed to all the risks of investing in property, either directly or indirectly through an unlisted managed fund.
Distributions
The Responsible Entity expects to make distributions on a Quarterly basis. Distributions will be paid by electronic transfer, typically within 10 days of the end of each Quarter. Further information on forecast distributions and the calculation of profit available for distribution is contained in Section 8.
NTA per Unit
Based on the Target Subscription being raised, the net tangible assets per Unit is forecast to be $0.97 at settlement of the acquisition of the Property on the basis of investments held at cost. On the basis that all acquisition property costs and fees are written off/expensed as part of the fair value adjustment, the net tangible assets per Unit is forecast to be $0.84 at settlement. If only the Minimum Subscription is raised the forecast is the same for the investments held at cost however with the fair value adjustments the net tangible assets per Unit is forecast to be $0.82 at settlement.
Borrowings
The Fund intends to borrow from a lender to provide senior debt funding for the settlement of the Property and the capacity to fund expenditure on the Property over the Forecast Period. The Responsible Entity has received an offer of debt from a major Australian bank with a maximum facility enabling a loan-to-value ratio (LVR) of 60%, however, borrowings have not been finalised at the date of this PDS. This Offer will not proceed if the senior debt funding is not finalised. If the Fund proceeds at only the Minimum Subscription amount it is projected that the initial debt will be made at an LVR 60%. The initial debt will be made at a LVR of 55% if the Target Subscription amount is raised. Further detail on this variance is provided in Section 9.
Interest Cover Ratio
Based on the Target Subscription being raised, the interest cover ratio for the first financial year after settlement is estimated at 3.21 times (2.98 if only the Minimum Subscription amount is raised) compared to an expected bank covenant of 1.50 times.
Returns
Upon completing settlement for all the Properties, it is projected to deliver Investor distributions commencing at 8.20% per annum through the rental income generated from the current leases at each Property. At completion of the investment term, the Fund is projected to generate a total internal rate of return (IRR) to Investors of 12.40% p.a.
Fund Overview
The Fund will acquire the Halls Head Property, the Madeley Property and Midland Property (each a Property, together the Properties), subject to the satisfaction of the Investment Conditions. Each Property shall be independently held via a wholly owned sub-trust of the proposed Head Trust.
Post settlement the Manager will perform asset management, administration, registry, accounting and compliance services on behalf of the investors to ensure continuity of the strong returns whilst also assessing all options to add additional value to each of the assets.
Use of Funds
The Responsible Entity will issue Units to applicants in exchange for the Application Money. The Application Money will be placed in the Application Bank Account. The Responsible Entity intends to use the Application Money in accordance with this PDS, including without limitation, in order to:
- Acquisition of the Properties and payment of the fees and costs;
- Financing fees and costs;
- Fund establishment costs;
- Working capital; and
- Interest rate derivative.
Fees & Costs
Fee
Percentage
Management fee
0.65% p.a. of the Fund’s Gross Assets.
Performance fee
20% of the Fund’s outperformance over a 10% IRR.
Acquisition fee
Equivalent to 2.00% of the Property’s gross purchase price.
Equity raising fee
2.00% of the equity capital raised by the Fund.
Investment Strategy
The Fund will acquire the Halls Head Property, the Madeley Property and Midland Property (each a Property, together the Properties), subject to the satisfaction of the Investment Conditions. Each Property shall be independently held via a wholly owned sub-trust of the proposed Head Trust.
Post settlement the Manager will perform asset management, administration, registry, accounting and compliance services on behalf of the investors to ensure continuity of the strong returns whilst also assessing all options to add additional value to each of the assets.
Investment Rationale
The Australian healthcare sector fundamentals are considered compelling by Vesta. The Fund is investing in properties that service this market. This section of the PDS identifies some of the general statistics in which Vesta considers support the demand for healthcare services generally in the medium to long term which, in turn, are expected to support tenant demand for the properties which are proposed to be acquired.
The Australian Healthcare Sector
The healthcare sector is underpinned by growing non-discretionary demand for healthcare services and infrastructure. The healthcare sector overall has high GDP Expenditure with healthcare representing ~9.9% of Australia’s GDP.
The key Australian healthcare demand drivers are:
- Increased focus on preventative care and surgical care. Historical Government policies have been aimed at placing greater emphasis on primary care to prevent excessive costs being pushed downstream.
- The ageing population is expected to continue to drive higher healthcare spend, with the number of people aged 65 and older expected to increase from 16% in 2019-2020.
- Approximately 95% of Australians aged 65 and over are living with two or more current long-term health conditions.
- Employment growth – The Health Care and Social Assistance industry is the largest employing industry in Australia, representing around 15.6% of workers (as at November 2024). The sector is expected to grow by 15.8% in the five years to November 2026.
- Medical services demand is non-cyclical and resilient to economic fluctuations, making healthcare property assets a compelling investment for income-oriented investors seeking stability and diversification.
Healthcare Real Estate Returns
The healthcare property sector has delivered strong returns and experienced relatively low volatility when compared to traditional real estate asset classes. The Manager believes that healthcare property has had sustained success largely because of the following characteristics:
- Reliable revenue streams, supported by government funding, enabling tenants to secure long-term leases which enhance overall financial stability.
- Typically, lower lease incentives are offered, with higher contracted escalations compared to traditional real estate asset classes.
- The healthcare property sector is considered a low-risk sector with minimal defaults and turnover, as practitioners establish a clientele and reputation tied to their location.
Properties
Halls Head – Street Address and Title Reference that all form part of this property:
- 1 Elderberry Circle, Halls Head WA (124 / P013767-1611/751)
- 66 Mahogany Drive, Halls Head WA (1250 / DP56236-2671/595)
- 1&2/70 Mahogany Drive, Halls Head WA (1 / SP039754-2510/87, 2 / SP039754-2510/88)
- 1,3&5 Peelwood Parade, Halls Head WA (11 / P013767-1611/703, 12 / P013767-1611/704, 3 / P013767-1611/705) (Halls Head Property).
Madeley Lot 2375 Plan 128768, Strata Plan SP11580 located at 210 Wanneroo Road, Madeley, Western Australia (Madeley Property).
Midland Lot 902 Plan 54697 Vol 2679, folio 592 located at 278 Great Eastern Highway, Midland, Western Australia (Midland Property).
Halls Head
The Halls Head Property comprises five buildings originally constructed as residential dwellings in the 1980s and converted for medical, consulting, and pharmacy uses in the 2000s. The precinct provides single-level improvements, except for the two-storey pharmacy, with at-grade parking for approximately 70 vehicles.
The Halls Head Property is located in the suburb of Halls Head, within the Local Government Authority of Mandurah, approximately 67km south of the Perth CBD and 3.5km from the Mandurah CBD.
Based on the dimensions, the total area of the Halls Head Property is approximately 5,957 sqm.
Of the 7 lots that comprise the Halls Head Property, under the City of Mandurah LPS No.12, six are zoned as “District Centre”, while the other one is zoned as “Residential” with approval to operate as a medical centre.
Purchase Price: $18,000,000
Key Financial & Tenancy Details
- Net Lettable area (m²): 1,871
- Net Passing Base Rent (p.a): $1,465,840
- Recoverable Outgoings (p.a): $142,848
- Tenants: Family Doctor Pty Ltd, Clinipath, and Mandurah Day/Night Pharmacy
- Occupancy: 100%
- WALE (Weighted Average Lease Expiry): 5.28 years (income)
Madeley
The tenancies within the Medical Centre provide complementary services and operational synergies (e.g., practitioners providing referrals to allied health, radiology services, and scripts for the pharmacy). The medical centre accommodates over 18 specialist practitioners.
The property is located at 210 Wanneroo Road, Madeley WA, on the east side of Wanneroo Road, approximately 20km north of Perth CBD. It is surrounded by an established community with various aged care housing across the road. Kingsway City Shopping Centre is adjacent, within 200m of the property.
Initially constructed in the early 1980s, with an extension to the east in the late 1980s. Further extensions were added in 2016, and the west addition was completed in 2017. The purpose-built medical centre accommodates 7 separate tenancies, including a medical centre, pharmacy, physiotherapist, dentist, therapist, radiologist, and optician.
4,281m² plus 669m² under license for additional parking.
"Special Zone – Additional Use" for Medical Centre, Pharmacy, and Professional Office.
Purchase Price: $9,800,000
Key Financial & Tenancy Details
- Net Lettable Area (m²): 1,479
- Net Passing Base Rent (p.a.): $732,586
- Recoverable Outgoings (p.a.): $187,669
- Year of Completion: Various improvements over the years, with the last extension completed in 2017
- Occupancy: 100%
- WALE (Weighted Average Lease Expiry): 3.82 years (income)
Midland
The tenancies within the Midland Property provide complementary services and operational synergies (e.g., practitioners providing referrals to allied health, blood tests from pathology, and scripts for the pharmacy).
Situated just 16 km northeast of Perth’s CBD, Midland is a vibrant community known for its strategic location and excellent amenities. It is a thriving suburb that blends suburban living with business convenience in a well-connected and accessible location. Easy access to major transportation routes, including the Great Eastern Highway and the Midland Train Station, making commuting easy for employees and clients.
The property is in fair to good condition and benefits from an adequate level of preventative maintenance, contributing to its current condition.
2,507m²
City of Swan Local Planning Scheme No. 17 and Midland Redevelopment Scheme Area (R-ACO)
Purchase Price: $7,100,000
Key Financial & Tenancy Details
- Total Net Lettable Area (m²): 975
- Net Passing Base Rent (p.a.): $510,081
- Recoverable Outgoings (p.a.): $84,359
- Year of Completion: 1970s
- Tenant: Swan Medical
- Occupancy: 100%
- WALE (Weighted Average Lease Expiry): 4.12 years (income)
Forecast Distributions
The Fund is projected to provide Unitholders with a distribution yield on Issue Price starting at 8.20% per annum, and averaging 8.5% per annum over the initial term with the potential for capital growth over the period of investment. The forecast IRR for the term of the Fund is 12.40%.
The forecasts are predictive in nature and have been determined based on a number of underlying assumptions (please refer to Section 8 for further information). As such, returns may be affected by incorrect assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Returns are not guaranteed.
Disclaimer
This site does not constitute an offer, recommendation, or invitation to any person, nor does it purport to provide all of the information an interested party may require in order to investigate the affairs of Vesta Medical Property Fund. This site is provided for information only and has not been prepared with the intention that the recipient should rely on it. Liquidity Technology Pty Ltd ("Liquidity") does not make any representation in relation to the contents of this site or give any assurances as to the accuracy or the degree of care or diligence used in preparing this document. The information, data, and advice herein is provided to recipients on the clear understanding that Liquidity nor any of its representatives, directors, officers, employees, agents, or advisers makes any representation or warranty about its accuracy, reliability, completeness, or suitability for any particular purpose and does not accept liability (including, but not limited to, for any expenses, losses, damages, and/or costs (including, but not limited to, indirect or consequential damage)) nor take any responsibility of any kind whatsoever (including, but not limited to, whether in contract, tort, financial or otherwise) for the information, data, or advice contained in or for any omission or for any other information, statement, or representation provided to any recipient (including, but not limited to, as a result of information, data, or advice being inaccurate, unreliable, incomplete, or unsuitable in any way and for any reason whatsoever). Users of this site must conduct their own investigation and analysis regarding any information, statement, or representation contained or provided to any recipient or its associates by Liquidity or any of the Liquidity Personnel. Each recipient waives any right of action, which it has now or in the future against Liquidity or any of the Liquidity Personnel in respect of any errors or omissions on or from this site, however caused. All rights are reserved. If the whole or any part of a provision of this "Notice and Disclaimer" is invalid, illegal, or unenforceable, then such provision will be severed and neither that part or provision or its severance will affect the validity or enforceability of the remaining parts or provisions.
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