This article is from the Australian Property Journal archive
CANADA’S NorthWest Healthcare has bought the Tennyson Centre in Adelaide and an adjoining development and expansion parcel for $92.75 million, and has launched a NZ$140 million raising via its New Zealand REIT Vital Healthcare that will fund the purchase.
Just last week NorthWest announced an agreement with Epworth Hospital via $128 million worth of sale and leaseback deals that will facilitate the development of a $600 million medical precinct in Victoria’s Geelong, and expansion of a rehabilitation hospital near the Melbourne CBD.
Vital’s fund manager, Aaron Hockly said the REIT would look to expand the Tennyson Centre on the 1,920 sqm development parcel. The 6,567 sqm Tennyson Centre comprises oncology, radiotherapy, imaging and consulting services tenants, and partner Icon Group has extended its lease for an additional 10 years.
“This acquisition is our first cancer centre of excellence and our third significant property investment in Adelaide, South Australia. It adds several established healthcare operators to Vital’s tenant base and is expected to provide ongoing AFFO growth for Vital’s unitholders,” Hockly said.
Vital said the acquisition aligns with Vital’s five-year portfolio strategy, supports adjusted funds from operations growth of 2% to 3% per annum, increases investment allocation to ambulatory care, enhances tenant diversification, and creates and expands relationships with national providers of allied health services.
President and CEO of Australia and New Zealand for NorthWest, Craig Mitchell said the Tennyson Centre and the opportunities offered by the adjacent development land will “allow us to develop and improve the provision of healthcare services and education/innovation to South Australians”.
Vital will conduct a NZ$115 million placement with new units issued at a fixed price of NZ$2.90 per unit, at a 3.7% discount to the previous closing price. NorthWest has committed to participate in the placement by subscribing for at least $37.4 million of new units, representing its pro rata 26.7% stake in Vital.
A $25 million unit purchase plan will allow all eligible shareholders to apply for up to $15,000 of new units in Vital.
NorthWest has over $5.5 billion in healthcare and infrastructure assets under management. Vital Healthcare Property Trust recently paid $9.4 million for a development site within the Coomera health precinct that has been earmarked by Queensland Health for a new public hospital to service the state’s fast-growing south east.
Healthcare is becoming increasingly attractive for property players. Elanor has just expanded its Healthcare Real Estate Fund with the $52 million acquisition of Highpoint Health Hub in Brisbane.
The Dexus Health Healthcare Property Fund has been particularly acquisitive, with the Bethesda Clinic fund-through development in Perth among its purchases.
HomeCo’s new healthcare REIT made its ASX debut to a huge investor welcome, while asset and wealth manager Real Asset Management Group has just launched a $521 million real estate investment trust.
