Settlement will occur in the ides of March.
IHF purchased the entire asset for $14.3 million in 2006.
Plans to redevelop the hospital are expected to be lodged with council by the end of the year.
A copy of ING’s statement about the transaction is copied below, and available at this link:
ING Real Estate Healthcare Fund (IHF) today announced that it has unconditionally contracted the sale of a 50% freehold interest in the Epworth Freemasons Private Hospital Clarendon Street, East Melbourne, to Epworth Foundation (Epworth), the current head tenant of the facility.
Epworth is to acquire the half interest for a purchase price of $14.0 million, representing 50% of IHF’s 31 December 2009 book value. Settlement is expected on 15 March 2010.
This asset was purchased by IHF in 2006 for $14.3 million with Epworth acquiring the operating business and entering into a 5-year lease of the site and a Development Deed.
The sale of a 50% interest will crystallise a profit share payment to Epworth at settlement. The net proceeds realised by IHF of $11.0 million will be used to retire bank debt and as a result, the Fund’s gearing will reduce on a pro forma basis from 54% at 31 December 2009 to 52%.
As part of the above transaction, IHF and Epworth will continue to advance the redevelopment of the site as a major private hospital and have also extended the existing lease by 12 years to 2026.
A concept design for the redevelopment of the site is nearing completion with lodgement for town planning expected before the end of 2010.
The proposed redevelopment consists of an extensive refurbishment of the existing hospital integrated with a significant new build component, increasing capacity by 90 beds and 4 theatres. This will result in a major health campus comprising 268 beds, 8 operating theatres, full diagnostics, radiotherapy and medical consulting. A new 20-year lease will replace the existing lease on the satisfaction of practical completion.
Subject to respective Board approvals, ING and Epworth have agreed on a series of milestones and conditions to advance this initiative.
IHF Chief Executive Officer, Miles Wentworth, said, “To have Epworth Foundation as our joint venture partner in the freehold and as a key tenant for a pending redevelopment of the hospital provides IHF with an enhanced alignment and positions the Fund well to advance this major hospital project. In addition to this, the application of the net proceeds to debt further strengthens the Fund’s balance sheet.”
About ING Real Estate Healthcare Fund
ING Real Estate Healthcare Fund is a publicly listed property trust in Australia. The Fund’s strategy is to invest in healthcare related property including hospitals, specialist medical office buildings, medical centres, rehabilitation facilities, residential aged care, laboratories and other related purpose-built healthcare facilities. IHF is the only listed healthcare property trust on the ASX, and is one of six real estate investment trusts managed by ING Real Estate Investment Management Australia on behalf of 60,000 investors.
About ING Real Estate Investment Management
Globally, ING Real Estate Investment Management focuses on the investment management of quality real estate in all major global markets with a total portfolio of more than A$100 billion. ING Real Estate Investment Management is one of the leading investment management companies and serves a broad client base from four continents, Europe, North America and South America, Asia and Australia.
ING Real Estate Investment Management is part of ING Group, a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services to over 85 million private, corporate and institutional clients in more than 40 countries.