The Model

The objective of the ADP Fund is to create a portfolio of investment-grade Specialist Disability Accommodation (SDA) properties, which will be sold to institutional investors following the leasing process.

Deliver SDA accommodation where it is needed

Our focus for investing in SDA accommodation will be focusing in metropolitan areas, as we consider it to be the area with the highest demand. By doing so, we anticipate a reduction in the risk of vacancies, resulting in an increase in the overall value of the SDA property portfolio.

Build an investment grade SDA Property portfolio

Our objective is to provide SDA properties that yield a gross rental return of 10-12% p.a., employing two primary strategies:

Leverage Institutional pricing asymmetry

The market for institutional property investment typically involves the purchase and sale of properties that generate income, with a focus on what is commonly referred to as “cap rates” – the ratio of rental income to purchase price. Our forecast is that the cap rate will typically be below 10%, which, if achieved, has the potential to yield favourable capital gains for investors.

Recycle Investment to multiply SDA property delivery

Following the sale of the SDA portfolio, any net profits will be distributed to investors, and the capital will be reinvested in building another SDA property portfolio, which will then also be sold. This will increase the number of much-needed SDA properties that can be delivered with each investment.

Deliver attractive investor returns – targeted to be 10-14% p.a.

To target a 10-14% income return to investors, net of fees, for completed and leased properties, the ADP fund will utilise a responsible level of debt that is no more than 60% of the property value. Furthermore, we strive to achieve a comparable 10-14% annualised return during the construction phase, utilising any resulting capital gains from the sale of the investment-grade SDA property portfolio.

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