Dexus Healthcare Fund Secures $70m Investment


Dexus’ open-ended, unlisted healthcare fund has secured $70 million in new capital from a new domestic institutional investor of which $36.5 million has been used to purchase a Brisbane office occupied by a radiology company.

The College Junction building, a modern, purpose-built building located at 695 Sandgate Road in Clayfield, will now be placed in the group’s growing Healthcare Wholesale Property Fund (HWPF).

The three year-old building, currently the head office for radiology clinic Qscan, offers a net lettable area of 3,118sq m across three floors and is fully leased with a WALE of 8.8 years.

Dexus funds management general manager Deborah Coakley did not disclose the identity of the new investor but said new equity would provide it with additional capacity to diversify and grow its portfolio of high-quality healthcare assets.

“HWPF continues to deliver strong performance, achieving a one-year return of 10.9 per cent as at 30 June 2020,” Coakley said.

▲ The transaction is expected to settle in November 2020.
▲ The transaction is expected to settle in November 2020.

ASX-listed Dexus, best known as Australia’s largest listed office landlord, has in recent years turned its attention to medical property, creating the healthcare-focused fund three years ago alongside joint venture partner Commercial & General.

Dexus Healthcare Wholesale Property Fund is one of the first of its kind and has a portfolio that will be worth about $654 million when finished.

The fund was initially seeded by $370 million in assets including the Calvary Adelaide Hospital, a 57,000sq m private hospital developed by C&G and the GP Plus Healthcare Centre in Adelaide. It currently holds a weighted average lease expiry of 27.5 years.

Dexus has also begun construction of the North Shore Health Hub, the first stage in what the company hopes will one day expand to a $1 billion healthcare precinct located on Frederick Street in St Leonards, complete with a “medi-hotel” and build-to-rent housing for workers.

The state-of-the-art facility will support existing infrastructure in a growing healthcare precinct on Sydney’s lower North Shore and is due for completion in late-2020.

Last year, Malaysian retirement fund Employees Provident Fund Malaysia took a $100 million stake in the wholesale fund.

Prior to that, the fund won backing of up to $100 million from the Clean Energy Finance Corporation as well as interest from Australian Ethical Investments.

Canada’s NorthWest Healthcare Properties, Australian Unity, Centuria and Barwon also run healthcare property funds.

NorthWest, backed by GIC, recently acquired half of Healthscope’s $2.5 billion hospitals portfolio, with New York-listed Medical Properties Trust taking over the other half.

The Canadian property trust is boosting its partnership with Singaporean sovereign fund GIC to invest $3.5 billion into Australian healthcare real estate.

Local fund managers including Barwon Investment Partners are also gaining scale.

Barwon recently struck a $200 million sale-and-leaseback deal with operator Healthe Care Australia to acquire Gosford Private Hospital on the NSW Central Coast.

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