Fortuitous Timing for Fledgling Healthcare Real Estate Fund

Amid the unprecedented global health challenge of coronavirus, ASX-listed Elanor Investors Group has seeded its unlisted healthcare real estate fund with the purchase of two Queensland medical office buildings.

The fund paid $123.3 million for the two assets: an office building on a 5, 771sq m corner site at 55 Little Edward Street, in Brisbane’s Spring Hill, and the seven-storey Pacific Private Clinic at 123 Nerang Street, Southport, on the Gold Coast.

Both properties are multi-tenanted medical offices and day surgeries in established health precincts in city fringe locations—and in a sector that analysts are forecasting will fare better than others in the wake of the coronavirus crisis.

Cushman & Wakefield’s Mike Walsh and Peter Court brokered the off-market package deal, which settled on 16 March against a backdrop of uncertainty in real estate markets, as valuers lose confidence in measuring the underlying value of commercial assets.

Elanor’s co-head of real estate, David Burgess, said the acquisitions were a positive start for the fund.

“The seed assets represent high investment quality commercial healthcare properties, underpinned by strong anchor tenants."

With healthcare expenditure already growing at more than two-and-a-half-times the GDP, Elanor’s stated investment strategy of tapping into a demand for efficient health care service delivery models seems all the more prescient in the face of the current global health crisis.

Elanor chief executive Glenn Willis said the group was positive about investment prospects within the growing Australian healthcare real estate sector.

“We have been actively reviewing the broader healthcare real estate sector for some time and the establishment of this Fund represents the fourth real estate investment sector of focus for the group,” Willis said.

Even before the outbreak of the Covid-19 virus, attractive yields and low income risk were already driving demand for healthcare assets in Australia, spurred by the nation’s ageing population.

A recent Urbis report predicted that heavy spending on the health sector would continue into the next decade, leading to thousands of new jobs in the health care and social assistance industries.