Barwon to launch specialist disability housing fund

Independent fund manager, Barwon Investment Partners, which manages more than $2 billion on behalf of its clients, will shortly launch the Barwon Disability Accommodation Fund. The property and “impact investment” fund is open-ended in structure and will target wholesale investors seeking returns from properties in the Australian specialist disability accommodation (SDA) sector, under the NDIS Scheme.

SDA refers to accommodation for people who require specialist housing solutions, including to assist with the delivery of supports that cater for their extreme functional impairment, or very high support needs.

The property fund is reportedly looking to raise $30 million.

The fund will give investors the opportunity to invest in SDA homes which have numerous benefits. The government has provided SDA funding to support SDA participants in finding specialised accommodation and stimulate investment opportunities to fund these housing solutions. The result is generous support for SDA participants, and opportunity for consistent annual returns on the housing investments.

There is a large demand for SDA homes, with research provided by the government in 2018 showing a 60% shortfall in available homes for this sector. The government has guaranteed continuous support for the next 20 years, which lowers the risk for potential investors.  Once the scheme is fully stretched, annual funding is expected to hit $700 million a year.

The fund will buy properties under the scheme and enter structured build-to-own development deals. According to the company website, Barwon says the “fund aims to provide investors with an attractive opportunity to invest in specialist disability accommodation whilst earning an attractive risk-adjusted return. The fund seeks to provide investors with distributions of 5.0 – 7.0% per annum, paid quarterly, with the potential for capital growth.

The fund has two assets with terms agreed and a total short-term pipeline of about $42 million of potential assets under assessment.”

Here are some of the benefits:

• 8.0%-10.0% p.a. target total return
• 5.0%-7.0% pa target distribution yield, paid quarterly
• Portfolio of modern, purpose-built SDA properties across Australia
• Housing in the boutique but growing sector is specially developed for people living with a disability
• Rental streams backed by the National Disability Insurance Scheme
• Investment with positive socially conscious outcomes
• Experienced investment team with strong  track record and knowledge of alternative property sectors
• Panel of preferred and established operators with deep experience in providing disability care and accommodation
• The NDIS Scheme sources tenants ready to move in, well in advance, so as to avoid vacancy at handover of the brand new house

The NDIS scheme was heralded as a landmark program for Australians with a disability when it was established in 2013. Since then, the scheme has become bogged down with red tape and bureaucracy, slowing down construction. Following the May 2019 election, the federal government appointed David Tune, former senior public servant, to commission a review of the NDIS and the way it is managed by the National Disability Insurance Agency (NDIA). There were 29 recommendations to improve the scheme, touching on ‘transparency’, ‘consistency’ and ‘timeliness in decision-making’. The report also found many positive outcomes that had been achieved.

The Barwon Disability Accommodation Fund is set to give investors the opportunity to acquire housing in a niche sector which caters for the needs of people with a disability. You’ll be hard pressed to find a fund that can give its investors such favourable metrics, while also demonstrably doing a good thing in the social sense.

Ishan Dan

Ishan is an experienced journalist covering The Inside Investor and The Insider Adviser publications.