HESTA has committed $200 million to a property mandate with the aim of building returns for members.
The super fund has established the HESTA Healthcare Property Trust, with private hospitals, general medical and residential aged care identified as potential attractive investment opportunities.
Managed by ISPT, it will focus on identifying investment opportunities in Australia’s fast-growing healthcare sector.
HESTA CEO Debby Blakey said this latest commitment was another example of how HESTA was leveraging its deep relationships in the health and community services sector to generate strong, long-term returns for members, while supporting jobs and growth in the sector where they work.
“We are actively looking for investment opportunities as Australia’s ageing population will see the need for a significant expansion in services and facilities in the coming years,” Ms Blakey said.
“HESTA has been a trusted industry partner for more than 32 years and our patient, long-term investment approach means we are ideally placed to support our sector as it seeks to meet future demand.”
Ms Blakey said the structure of the mandate gave HESTA the option to grow its commitment over time.
“We’re very excited by the potential opportunity and, given performance meets our expectations and appropriate investments can be identified, we’re open to increasing our exposure,” Ms Blakey said.
HESTA was a co-founder of ISPT and, in addition to this latest mandate, is invested across the ISPT platform of property trusts. Ms Blakey said HESTA had developed a strong relationship with ISPT over many years and were closely aligned on integrating responsible investment considerations into their investment approach.
ISPT CEO Daryl Browning said: “ISPT looks forward to continuing our long and successful partnership with major investor HESTA as they invest in the Health and Community Services sector”.
HESTA CIO Sonya Sawtell-Rickson said the focus on healthcare and aged care property would provide diversification for the broader HESTA property portfolio.
“Healthcare and aged care property assets are not as exposed to the economic cycle as other types of large scale commercial or retail property investments we have in the portfolio,” Ms Sawtell-Rickson said.
“We believe the strategy and approach we will take through this mandate and our strong connections and knowledge of the sector will unlock opportunities that can provide strong long-term risk-adjusted returns and alignment with our members.”
Ms Sawtell-Rickson said the investment team, in partnership with ISPT, is focusing on metropolitan and regional city locations and a broad range of deal structures.
This could include sale and leaseback arrangements, asset co-ownership, capital partnering on brownfield developments or greenfield asset expansions.
“We’re a long-horizon, patient investor so we’re very aligned with health and community sector organisations that are similarly wanting to make very long-term decisions about their real estate needs and want a stable, trusted investor to partner with.
“We believe that the opportunities we’re targeting through this mandate can also free up capital for these healthcare and aged care providers so they can invest in other opportunities like new technologies, upskilling their workforces and expanding into new areas of operation,” she said.
The initial $200 million commitment is targeted at equity investments.