$29 Million Capital Raise Proves Popular
Ideal investment opportunities include A-grade tenants, recession-proof industries, favourable lease terms and low risk profiles. So it’s no surprise that our new Tauranga Medical Fund is now fully subscribed.
With a total capital raise of $29m, our investors will soon own two high-quality new buildings that will be tenanted by Health New Zealand and Bay Radiology.
This is our sixth fund and we have managed to raise the capital earlier than necessary, given the second building isn’t due to settle until mid-December. The popularity of this equity raise means we can defer drawing down the 30% bank finance required until the very last minute, which plays nicely into our investors’ hands given that interest rates are now falling. We should be well-placed to lock in a good long-term rate and limit our exposure to interest rates moving forward.
Secret to Success
Medical assets are robust and backed by government departments, meaning there is low risk of tenants defaulting on their rent. No matter what is happening in the wider economy, people will always need medical care and demand for specialist health services has never been higher.
Both buildings are located at the bottom of 17th Avenue in a new health/business park opposite the Historic Village.
The first one is a two-story 1543m² building designed to cater for paediatric outpatients. Health New Zealand plans to house a number of services under this roof, including child and adolescent mental health experts and the Child Health Integrated Response Pathway (CHIRP) team who guide children and whānau with worries about child development, challenging behaviours, and possible neurodiversity such as autism and ADHD.
This visionary facility has been fitted out with a playground and special facilities to help clinicians and their patients feel right at home. A 12 year lease was negotiated and we look forward to a long and stable relationship with our tenant.
Long Leases and Advanced Diagnostics
The second building is larger at 2751m² and will be home to Bay Radiology for the next 20 years. This new base near the hospital will consolidate their services around the region and will feature a new PET-CT scanner so Tauranga patients no longer have to travel to Auckland or Waikato to access this diagnostic technology.
The building will be finished in late September and Bay Radiology’s fit out should be complete by Christmas, ready to welcome patients in 2025. In readiness to take over ownership of this property from the developer (Classic Developments), we recently initiated the second stage of our capital raise and our fund is now fully subscribed.
Forward Planning
This is the first time Classic Collectives has invested in medical assets. And given the success of this fund, we will look for further opportunities to invest in this asset class again in future. Congratulations to all of our investors who have seized this opportunity with both hands.
If you have any questions or would like to discuss upcoming fund opportunities at any time, feel free to get in touch.
EMAIL: Owen.Cooney@classiccollectives.co.nz
PHONE: 027 222 6932
