This article is from the Australian Property Journal archive
HMC Capital and HealthCo Healthcare and Wellness REIT (HCW) kicked off their equity raisings of a combined $435 million yesterday, following their announcement of the $1.2 billion acquisition of 11 Healthscope hospitals.
HMC Capital is tapping investors for $125 million at $3.50 a share, a 4.1% discount to last close, with a $30 million share purchase plan to follow.
HCW’s ask is $320 million, made up of an $89 million underwritten placement and a $231 million non-renounceable entitlement offer on a one-for-1.90 basis. Its offer price is $1.35 per unit, a 3.2% discount to the previous theoretical ex rights price.
HMC Capital would also contribute its entitlement of $48 million in the institutional leg for the rights issue, and sub-underwrite as much as $75 million of the rights issue’s retail leg.
As part of the deal, HCW is acquiring a 100% interest in four hospitals for $256 million, and a circa 50% equity interest in the unlisted fund that will acquire the other seven hospitals for $944 million.
The $1.2 billion acquisition price reflects a portfolio cap rate of 5.1%, and represents an implied acquisition net operating income yield of 5.8% and an unlevered internal rate of return of more than 9%.
The portfolio features long-term absolute net leases of 16-year initial terms plus eight 10-year options.
“HMC Capital is pleased to announce another major transaction for the group which delivers on our strategy to deploy capital into high-quality alternative assets with significant pricing power and development upside on behalf of our capital partners,” HMC Capital managing director and CEO, David Di Pilla said.
“Our partnership with Healthscope on this transaction enabled HMC Capital to shape a compelling transaction with a significantly improved tenant covenant and rental growth upside via CPI -linked indexation and higher development returns.
He said the acquisition “accelerates our plans to establish an unlisted fund focused on large-scale healthcare opportunities and developments”.
“We see this fund as being highly complementary to HCW and its ability to access larger-scale investment and development opportunities. We are already in active discussions with multiple domestic and global institutional investors who are undertaking due diligence on the opportunity.”
HMC reaffirmed its FY23 distributions guidance of 12.0 cents, in line with FY22.
HCW yesterday upgraded its distributions guidance from 7.5 to 7.6c.
