In addition to Australian  Unity Investment’s recent launch  of its retirement village property  fund, Aviiid, another manager in  this market, has announced its  A-CARES #1 fund, said Scott  Marinchek, managing director of  Aviiid Third-age Living.  The Aviiid fund would be  Marinchek’s second tilt at this  market, having exited Mariner  Financial’s third-age living fund  in late 2008 amid the parent  company’s troubles. But his  attitude towards the village market  remained upbeat.  Aviiid’s Care &  Accommodation Real Estate  Securities Australian Fund  would be an unlisted, 10-year  closed-ended vehicle specifically  established to provide sustainable  cash distributions to institutional  investment partners. 

Marinchek said the fund aims  to “conservatively align” investment  partners with the long-term best  interests of residents and their  families, and “have more choices  for ‘ageing in place’ by managing  an integrated suite of assets across  the continuum of accommodation  and care”.  “We’re at an interesting  inflection point in market  fundamentals, as projected demand  for new and more relevant types  of senior housing continues to  escalate while the supply of existing  accommodation faces challenges of  obsolescence,” he said.  Marinchek attributed the  sector’s somewhat tarnished  reputation to a pre-GFC influx of  new capital, predominantly from  investment banks and property  developers, at price levels which  assumed record-high property  growth forecasts.

In some cases, assets were  bought without institutional  investment-grade due diligence  from speculative developers  or passive investors, using  unsustainably high levels of debt  and often assuming unsustainably  low budgets for capital expenditure  on established assets.  This showed a “lack of  alignment between investors,  lenders, resident consumers and  managers,” Marinchek saed, “and  has contributed to poor investment  performance, brand damage and  currently distressed pricing on  otherwise attractive assets”.  The A-CARES fund would  include independent living  properties, residential aged care  properties, and transitionary or  hybrid types of assisted living  properties.  There would also be a  nominal allocation to related  seniors’ community infrastructure  including medical centre buildings  that were close to residential  accommodation holdings.  About 25 per cent of  the portfolio would be spent  refurbishing obsolete assets and  developing new accommodation to  provide more lifestyle choices.

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