HMC Capital has picked up a portfolio of 11 hospitals, seven which will be held by two trusts.
The $1.2 billion deal will see the vendor, Alabama-based New York listed Medical Properties Trust Inc, break even on the price it paid Brookfield’s Healthscope in a leaseback agreement four years ago.
The assets will be settled in stages – or tranches – allowing the purchaser to conclude two capital raisings; it is already in due diligence with multiple domestic and global institutional investors, it said.
All up they offer 1478 beds.
Following settlement, HMC will hold assets under management worth $7.5b.
Healthscope Hospital Portfolio
Marketed as the Healthscope Hospital Portfolio, MTP listed the assets last year amid a major share price slip – from a peak of $US23.74 last January, each is now worth $US7.41.
The collection includes, in Victoria, the Knox Private Hospital in Wantirna (with 359 licensed beds), Northpark Private Hospital in Bundoora (144), Ringwood Private Hospital (75), the Geelong Clinic, in St Albans Park (52) and the Victorian Rehabilitation Centre at Glen Waverley (143).
In New South Wales, the portfolio includes the Nepean Private Hospital in Kingswood (109 licensed beds), Sydney Southwest Private Hospital in Liverpool (87 beds) and Campbelltown Private Hospital (82).
Two of the properties are in Queensland’s Brisbane – the Sunnybank Private Hospital, with 122 licensed beds, and the Pine Rivers Private Hospital in Strathpine (81).
The final asset is the Mount Hospital, in Perth’s CBD, with 244 beds.
Pine Rivers and Geelong Clinic are psychiatric hospitals.
The Glen Waverley property is for rehabilitation (story continues below).
The balance provide acute care.
Inflation a negative factor to value
Despite having a long Weighted Average Lease Expiry (16 years), demand for the properties was negatively affected by the leaseback which calls for rent rises of 2.5 per cent per annum, rather than being aligned with inflation which is tracking at well over twice that.
That said, Australian Unity, Centuria, Charter Hall and Dexus are amongst the groups speculated to have looked in.
HMC renegotiated the base rent escalation to CPI as part of its negotiation.
Its deal reflects a passing yield of 5.3pc rising to 5.6pc based on net operating income.
The unlevered forecasted internal rate of return, meanwhile, is expected to come in at just under 9pc.
HMC will hold four of the assets – mental health/rehabilitation hospitals, worth $256m, with settlement scheduled in May (this is considered the first tranche).
The other two tranches – three acute care hospitals worth $474m expected to settle in May and four acute care hospitals worth $470m scheduled to settle from July-September – are being wholly acquired by the HealthCo Healthcare & Wellness REIT (HCW), with a view to be held in a 50:50 partnership with an unlaunched fund, Healthcare & Life Sciences Unlisted Trust.
Like HCW, HMC will manage the HLSUT.
It is also handling the two capital raisings, via JP Morgan and Macquarie Capital.
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