New Centuria fund settles on three short stay healthcare investments worth $115m

Centuria Healthcare has spent $51.7m on the five year old Vermont South Medical Centre for a trust.

Centuria Healthcare has spent $115 million on three short-stay medical centres anchored to Nexus Hospitals for its newly launched Centuria Healthcare Property Fund – which is set to pay its first distribution on Tuesday.

In the most valuable deal, it outlaid $55.5m for the Bloomfield Medical Centre in Orange, about 260 kilometres west of Sydney.

Completed last year opposite the public Orange Base Hospital – in a newly created “Life Sciences Precinct” – the six storey, 8002 sqm asset with 175 car parks is fit out with accommodation, a 24 hour emergency centre, café and centre for radiology and pathology.

In Melbourne’s Vermont South, the Centuria Healthcare managed trust invested $51.7m for the Vermont South Medical Centre at 645-647 Burwood Highway (pictured above, right).

Constructed five years ago, this 6906 sqm double storey building includes a short stay hospital and medical centre.

It also contains 206 car parks – some undercover – and is 500 metres from Eastlink.

The suburb is about 20 kilometres east of the city.

The third asset Centuria Healthcare acquired for the recently launched, open-ended unlisted fund – Hobart Day Surgery – cost $5.6m.

All properties were owned or managed by Nexus Hospitals and settled in the last three weeks.

CHPF will control 85 per cent; the balance, by Nexus Property Unit Trust (NPUT), held by specialist doctors.

CHPF stocking healthcare portfolio

Elsewhere in Australia, the trust has call options for an $11.8m medical centre, WEST Medical HQ, operated by Healius, in Adelaide’s West Lakes and $12.7m healthcare investment, the Sundew Day Surgery, in Joondalup, 26kms north of Perth (also anchored to Nexus).

Also in Western Australia, it also owns the Forrest Family Practice in South Bunbury, after recently spending $6.4m.

It is contracted to acquire the Priceline run Murrumba Village Medical Centre north of Brisbane, for $12.7m, too.

Centuria Healthcare managing director Andrew Hemming said “throughout 2020, healthcare real estate has come into the spotlight with COVID-19 highlighting the sector’s unmet demand” and the company has “seen strong investor appetite to capitalise on the market’s undersupply, especially given the backdrop of low interest rates and income volatility.”

“We’ve launched CHPF in the midst of Australia’s first recession in 29 years and were fully subscribed within a few weeks,” the executive added (story continues below).

“It has been a good litmus test for the healthcare real estate asset class, and we are anticipating more acquisitions before the end of the calendar year”.

The fund temporarily suspended new applicants last Thursday with plans to reopen on November 12.

Investors need a minimum of $10,000 to look in.

“Centuria Healthcare has indicated its acquisition strategy is in part driven by operator partnerships,” Mr Hemming said.

“At present, sourcing capital is less of an issue than finding the right healthcare property investments.

“For any fund in this sector, this is the real crux – finding the right opportunities, be they existing properties or development opportunities.

“Where we differ…is through our focus on partnering with our operators, which provide recurring opportunities.

“Our partnerships help cement mutually beneficial outcomes for the operators, our investors and the end users.

“We like this arrangement as ‘having skin in the game’ helps align operators to deliver well-performing, cost-effective models of care” the executive added.

“Leading operators within the portfolio include QIC backed, Nexus Hospitals, ASX-listed, Healius Limited, national pharmacy-retailer, Priceline, and Medical Miracle,” according to a company statement.

NPUT will hold 15pc of the four Nexus Hospitals anchored assets.

CHPF’s portfolio is fully occupied.

The Weighted Average Lease Expiry is 5.7 years.

Its first monthly distribution is anticipated to be 5.75pc.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of realestatesource.com.au.

Marc Pallisco