Healthcare property: Cashflow confidence a welcome distinction

Finding yield isn’t the problem for investors – even in these tough times. Identifying sustainable sources is the nub of the problem, says Elanor Investors Group’s (ASX: ENN) David Burgess.

“What’s the sustainability of the income? How long will those yield levels be maintained?” Burgess says.

“Through the GFC, income returns in healthcare not only remained stable, they actually grew.”

During the pandemic, yields from healthcare properties in Elanor’s portfolio have been similarly robust, with few tenants requiring rental relief.

“It’s a sector where you have good visibility into the strength of cashflows, and confidence that they are not in decline like some other sectors,” says Burgess.

Australian healthcare listed property is also backed by solid fundamentals, including:

• Expenditure growth of at least 2.5-times GDP for several years
• Australian population growth of around 20-times OECD average (pre-COVID).
• An ageing demographic that is projected to comprise 18% of the total population by 2030, up from current 15% currently.

In the following video, Burgess also reveals his preferred types of Australian healthcare property, favoured tenant attributes and how he handles risk.