This article is from the Australian Property Journal archive
ASX-listed HealthCo Healthcare & Wellness REIT (HCW) has confirmed its parent company HMC Capital is in talks about a potential buyout of Australia’s second-largest hospital operator, Healthscope, which is struggling with $1.6 billion of debt due to high costs.
HealthCo owns 11 Healthscope hospitals, buying the portfolio in 2023 for more than $1.1 billion alongside an unlisted healthcare fund (UHF).
HCW said on Friday that HCW and UHF have been approached by “capable and qualified parties to potentially tenant the 11 hospitals including a consortium led by HMC Capital’s Private Equity Division”.
“HCW understands that HMC is in discussions with a broad group of key stakeholders as part of the consortium.
“HCW will consider all proposals.
“HCW and UHF have made it clear that further rental support will not be provided to Healthscope.”
Healthscope was turned private by Brookfield when the Canadian giant acquired the company for $4.4 billion in 2019. More recently, it has been grappling with growing costs.
Healthscope hospitals account for 59% of the trust’s earnings. HCW’s portfolio of Healthscope hospitals was valued at $1.5 billion last year, HCW said.
HMC Capital managing director, real estate, Sid Sharma, said, “We recognise that the HCW unit price has continued to be impacted by speculation about Healthscope and have proactively prepared for a number of potential scenarios that could play out in the short term.”
HCW’s share price six months ago sat at $1.23. It hit as low as $0.92 in recent and was sitting at $0.98 on Friday.
“We are pleased with the inbound interest from potential tenants eager to ensure continuity of essential healthcare services to Australians. Our conviction in private hospitals as an asset class and our own hospitals remains unchanged,” Sharma said.
On Friday, HCW posted first-half funds from operations and distributions both of 4.2c per unit, or $23.5 million, showing 5% growth on the prior corresponding period.
December portfolio revaluations delivered a 0.8% uptick. The portfolio recorded 100% cash rent collection in the half, a 99% occupancy rate with an 11.6-yea weighted average lease expiry.
Gearing was 32.4% at the lower end of the 30% to 40% target range, and it has $115 million of available liquidity
