This article is from the Australian Property Journal archive
INDUSTRY superannuation fund-backed property investor ISPT and industry super fund Hesta have teamed up to acquire a 50-year ground lease from St Vincent’s Health Australia (SVHA) on Melbourne’s city fringe, where they will develop a $140 million on hospital campus building.
ISPT Core Fund and Hesta will each co-invest 50% in the 31-35 Victoria Parade building in Fitzroy. St Vincent’s has pre-committed to a 10-year lease over 5,000 sqm as it relocates its existing administration, office and health services from other hospital and satellite campuses.
The land is zoned for public use – health and community under the City of Yarra and is currently occupied by the former Hall of Sciences building, now known as Brenan Hall, and an adjacent vacant site, which has been owned by St Vincent’s for a number of years and earmarked for development under its campus master plan. The new development proposal, designed by Bates Smart, retains and incorporates the existing heritage-listed Brenan Hall into the ground floor of the 12-level-plus basement mixed-use healthcare accommodation building.
The fast-growing precinct, already home to St Vincent’s Hospital Melbourne and St Vincent’s Private Hospital Fitzroy, is also seeing a $180 million, 12-storey medical facility being built next to the private hospital, while the Victorian government has given the go-ahead for the $206 million Aikenhead Centre for Medical Discovery, Australia’s first collaborative, hospital-based biomedical engineering research centre.
ISPT and Hesta are aiming to submit plans to Council in the coming months, with practical completion expected by 2025.
Tom Byrnes from Charter Keck Cramer and Andrew Grant of APG Advisory brokered the transaction for an undisclosed sum.
The deal represents ISPT’s first direct property acquisition in the fast-growing healthcare and life sciences sector.
“We especially like the opportunity to help shape the future-designed workplaces of the numerous and diverse workers within medical campuses, many of whom have their superannuation with Hesta and other investors of ISPT,” said Robert Pepicelli, general manager, healthcare and life sciences at ISPT.
“We are focussed on working with operators at the early stages of their real estate planning, to participate in the design, development and long-term ownership of the physical infrastructure which supports their operations.”
Hesta CIO, Sonya Sawtell-Rickson said, “This investment with ISPT supports our continued focus on identifying opportunities in Australia’s fast-growing healthcare sector,”
Total assets under management in the life sciences real estate sector are valued at about $6.5 billion and the total market size is estimated to be between $150 billion and $250 billion. Growth projections for healthcare in general and the life sciences sector, as well as the ageing population and increased private and government investment, are attracting growing interest from venture capitalists and institutional and commercial real estate investors, as the sector’s strong fundamentals offer secure, reliable, and long-term income.
Also on the city fringe, PDG is currently developing a $1 billion health and research precinct on the northern edge of Melbourne’s CBD, close to the existing hospitals precinct and University of Melbourne. The project will be the future headquarters of CSL and reached full commitment early in the year with the Royal Melbourne Hospital signing up for 10,000 sqm of space. In the eastern suburbs, APH Holding has secured government tenant Eastern Health to anchor stage one of its $320 million Wellington Health precinct in Melbourne’s Box Hill on a 40-year term.
