Australia’s second-largest private hospital operator, the Brookfield-owned Healthscope, has committed to long-term leases for 11 properties in a billion-dollar acquisition deal.
In the $1.2-billion deal, HMC Capital acquired the properties in the Healthscope Hospital Portfolio from Medical Properties Trust, a US-based entity with shareholders including the Vanguard Group and BlackRock.
It provides an implied acquisition net operating income yield of 5.8 per cent and an unlevered internal rate of return of more than 9 per cent.
HMC Capital acquired the properties through their HealthCo Healthcare and Wellness REIT and a new unlisted fund for healthcare and life sciences.
The unlisted fund was created with $2 billion provided by HMC Capital.
“This acquisition transforms HealthCo Healthcare and Wellness REIT into Australia’s largest diversified healthcare REIT with greater exposure to critical healthcare infrastructure in Australia’s major capital cities,” HMC Capital managing director and chief executive David Di Pilla said.
HealthCo Healthcare and Wellness REIT was created by the property funds management group HomeCo.
There will be three tranches for the settlement and transfer of assets with HealthCo Healthcare and Wellness REIT buying $730 million of the assets upfront.
The new unlisted fund will settle the other $470 million in assets between July and September 2023.
Four mental health-rehabilitation hospitals will be part of the first tranche acquired for $256 million with settlement expected in May, 2023.
Three acute care hospitals will be acquired by the unlisted fund for $474 million, again with settlement expected in May, 2023.
It will then acquire four more acute care hospitals for $470 million with settlement expected between July and September 2023.
HealthCo Healthcare and Wellness REIT will use capital raising to fund its part of the deal for $320 million.
HMC Capital will support this with $123 million in the entitlement offer, a bonus unit and improved management fee structure for the REIT.
The company’s assets under management will increase to $7.5 billion after the deal with its $10 billion assets under management target expected to be achieved by the end of 2023.
Medical Properties Trust took over the 11 properties when a larger portfolio of assets were split between the trust and NorthWest Healthcare Properties in 2019 when Brookfield took over Healthscope.
Brookfield sold off 22 hospitals including the 11 properties for $2.5 billion during its $4.4 billion takeover of Healthscope.
Investment interest in the life sciences and healthcare sector has boomed as innovation centres and districts are planned and developed to tackle a growing demand as Australia’s population lives longer and grows older.
