Australia’s largest commercial landlord, Dexus, is building considerable muscle tone into its healthcare-led asset diversification strategy with $420 million of new equity injected into its war chest.
The latest capital raise was across two funds—its Dexus Real Estate Partnership 1 and open-ended unlisted Dexus Healthcare Property Fund.
“These successful equity raises deliver on our strategic objective to grow and diversify our funds management business, providing capacity for DREP1 and DHPF to execute on their respective strategies,” Dexus chief executive Darren Steinberg said.
Investor appetite for healthcare assets has ramped up significantly over recent years and the capital boost to the two Dexus funds is a clear signal it is yet to be sated.
By 2041, the Australian healthcare property sector is forecast to be worth $41 billion—rising exponentially in value by 63 per cent in under 20 years—as investments in medical facilities increase to cater to the nation's aging population.
Economic uncertainty also is driving the influx of capital into the sector, which is deemed a defensive asset class, and a limited pool of existing institutional-grade properties is resulting in a strengthening development play.
The new equity from the Dexus capital raise lifts the DREP1 investment capacity to about $1 billion and represents the final close for the fund.
As well, the fund has secured two additional assets—one in south-east Queensland and the other in Victoria.
They include a medical and professional centre with leasing and development upside at 90 Goodchap Street, Noosaville, which comprises 7000sq m of net lettable area across three buildings within the Noosa medical precinct; and a 46ha landholding within the West Melbourne Ravehall industrial precinct that offers a repositioning opportunity through rezoning and development.
Existing investors accounted for 80 per cent of the new capital in the fully subscribed DHPF equity raise, which will be used to fund further investment in the under-construction Australian Bragg Centre in Adelaide and other acquisitions.
Launched in 2017, the fund is a key part of Dexus’s asset diversification strategy and holds about $1.5 billion worth of large-scale healthcare assets anchored by well-credentialled operators in the sector. It has 15 institutional investors.
