Elanor Investors Group (ENN) has spent $22.9 million on a three year old Rockingham medical centre.
Two Civic Boulevard is trading on a 5.5 per cent capitalisation rate.
It is the fourth asset for the group’s managed Elanor Healthcare Real Estate Fund (EHREF) which launched in March.
EHREF and the Rockingham asset
At the north east corner of Central Promenade, the Rockingham complex contains 2896 square metres of lettable area.
It was purpose built for the two tenants: Icon Cancer Centre and Q-Scan Radiology.
The Weighted Average Lease Expiry is 7.1 years.
Rockingham is in a growth corridor about 45 kilometres south of Perth.
With the acquisition, EHREF now controls assets worth $183m.
It is anticipating to distribute 7.4 pc to investors in its first year.
Fund manager and ENN co-head David Burgess said the trust focuses on properties backed by healthcare tenants which provide essential out-of-public hospital services.
“The fund’s strategy capitalises on the growing cost pressures in the healthcare system which, combined with advances in health technology, is driving the delivery of healthcare services to ‘out of public hospital’ facilities such as lower-cost day surgeries and medical centres,” the executive added.
Rather than seek rental relief during COVID, several of its key tenants extended lease terms, according to the businessman (story continues below).
“The often large capital expenditure by tenants in equipping their premises results in EHREF’s healthcare real estate assets having very high tenant retention rates,” Mr Burgess said – a theme echoed by agents which deal specifically in this sector.
Busy time for healthcare property deals
It has been a busy few weeks for healthcare real estate related deals.
ENN is responsible for the biggest seeding a fund with an $80.2m Woolloongabba investment containing two low-rise buildings, one rented to Queensland Health.
Earlier, for EHREF, it spent $37m on a modern facility also in that suburb.
Elsewhere in Brisbane, Barwon Investment Partners recently sold the Newmarket 7 Day Medical Centre for $10.4m.
In a surprise move in Sydney’s Darlinghurst, last month, St Vincent’s Hospital acquired the Green Park Hotel in a deal speculated to be worth between $5-$10m.
That buyer, which abuts the property to the east and south, will convert part of the 127 year old pub into a community service based facility.
Another ENN managed entity in September announced it would convert part of a recently vacated Target tenancy within Riverside Plaza, at Canberra’s Queanbeyan, into a medical centre.
Healthcare sector deals have been frequent in Melbourne, too, despite the second lockdown.
Last week we reported three disposals, one to an occupier, for a total of $13.5m.
A fortnight ago another two near Knox Private Hospital traded – for $5m and $4.4m respectively.
Also last month, Centuria Healthcare Property Fund which like EHREF is relatively new, paid $115m for three short stay healthcare investments – in Melbourne’s Vermont South (which set it back $51.7m), the New South Wales town of Orange ($55.5m) and Hobart ($5.6m).