A fully-leased medical office property still under construction has been sold off-market for $26 million in Brisbane, evidence the ravenous appetite for healthcare assets has rolled into 2022.
The Silverstone Developments project at 11 Commercial Road, Newstead is the latest in a string of $260-million worth of transactions in the private developer’s books during the past 18 months, increasingly focused on healthcare developments.
More than two-thirds of the “quasi-medical” office building in Newstead has been leased to i-Med and sold to the John James Foundation.
Silverstone Developments managing director Troy Daffy said the focus on the healthcare sector had delivered tighter yields, strong demand and sticky tenants, with Dexus and Northwest REITs partnering in fund-throughs across south-east Queensland.
“As a private developer, those deals where you get in and out, they’re a good outcome,” Daffy said.
“For us it’s opportunistic, where we can acquire land, that might be near an existing healthcare asset, where you might see a large population growth and where it’s lacking in medical assets.
“We’ll secure a large parcel of land. And that’s a strategy that’s worked quite well for us … it’s a long game, but it’s worked well for us. We started doing this about five years ago, and it’s just all coming together (now).
“We’re also taking another approach where we’re trying to align ourselves with medical users. We’ve probably doubled down on both approaches.”
Daffy said some of their developments had started as traditional commercial developments but as Silverstone developed a greater understanding of the value of the medical sector it had honed its approach to developments.
Cushman & Wakefield’s Mike Walsh and Peter Court handled the end-to-end transaction after initially selling the vacant site to Silverstone Developments in 2019 for $2.9 million.
“The sale is further evidence of the well-documented theme of capital seeking a secure, quality-built asset that is well-leased with strong tenure,” Walsh said.
“Combined with the building being brand new and occupying a prime location in Brisbane’s most sought-after mixed-use precinct, John James Foundation moved quickly to secure the opportunity off-market.”
Walsh said the sale price of $12,077 per sq m had been in line with market expectations.
It’s been a busy few months for the south-east Queensland developer with the Spring Hill Day Hospital under construction and now 70 per cent leased, following the 12-year lease agreement with Queensland Fertility Group. This is being delivered on a fund-through arrangement with Dexus.
The developer also lodged plans for a 9000sq m, 12-storey landmark healthcare facility in the Mater Hill precinct on an 1800sq m parcel of land.
Silverstone has tapped a niche market flush with cashed-up institutional investors looking for exposure to higher yields and sticky tenants in the healthcare sector.
The pandemic has highlighted the importance of healthcare property assets and the growing appetite for improved healthcare outcomes for an ageing population.
International superannuation funds have been dipping their toes into the Australian healthcare property market with growing interest in the stable assets and good returns on offer.