A Specialist Healthcare Funds Management Vehicle
Centuria has entered the strongly performing healthcare real estate sector with its wholly-owned subsidiary, Centuria Platform Investments Pty Ltd, acquiring a 63.06% economic interest in Heathley Limited’s (Heathley) property funds management platform for $24.4 million.
The transaction has been funded from Centuria Capital Group’s balance sheet. On completion of the transaction, the resulting Centuria Heathley vehicle will be jointly owned by Centuria and interests associated with Heathley management.
Heathley is a specialised healthcare property fund manager with a $620 million AUM platform of unlisted funds with nationally diversified assets and a strategic focus on the healthcare chain, including medical centres, day hospitals and tertiary aged care.
Centuria Heathley increases CNI’s unlisted real estate AUM by $0.6 billion, taking Group AUM to $6.2 billion1. The transaction introduces a new asset class to Centuria’s expanding real estate platform and fully aligns it to the healthcare property sector though a preferred, specialised manager.
The Healthcare Funds Management Landscape
The Australian real estate healthcare sector is highly fragmented with a limited number of securitisation and institutional real estate managers servicing the asset class.
Centuria Heathley has capacity to expand to circa $1.0 billion AUM in the near term with known potential projects as well as the ability to expand its asset footprint and unlock new retail and wholesale mandates within the sector.
Healthcare real estate has tended to produce higher total returns compared to traditional real estate sectors and is underpinned by fundamentals from Australia’s growing and ageing population, longer life expectancy, increased requirements for ongoing healthcare and continued focus from the Federal Government on preventative care. Healthcare expenditure accounted for $170 billion2 growing 4.7%2 over the 10 years to 2015-16 and is one of the largest contributors to Australia’s GDP at 10.3%2.
John McBain, Centuria Group CEO, said: “The formation of Centuria Heathley marks another important step in Centuria’s growth path. Centuria Heathley demonstrates our commitment towards identifying and executing transactions that complement CNI’s existing platform. Centuria Heathley will provide additional opportunities to grow both our assets under management and recurring revenues.”
Andrew Hemming, Heathley Chief Executive Officer, said: “We welcome the establishment of Centuria Heathley and the opportunity to continue utilising our specialised management capability within the healthcare sector while accessing new capital sources and distribution networks as well as Centuria’s experienced real estate team.”
“We are extremely confident that the combination of skills and attributes each partner brings to Centuria Heathley will not only accelerate growth in our traditional vehicles but will allow us to bring our pipeline forward, enabling us to execute on much larger assets and crystalise wholesale mandate discussions we are presently finalising.”
Jason Huljich, Centuria Director and Head of Real Estate and Funds Management, said: “Establishing a large footprint in healthcare with such a well credentialed manager provides exposure to an asset class with sound underlying fundamentals and increasing national demand. Along with office and industrial, Centuria’s core real estate platform is now aligned to three strong performing real estate sectors and will gain further access to new unlisted retail and wholesale mandates.”
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This announcement may contain forward-looking statements, guidance, forecasts, estimates, prospects, projections or statements in relation to future matters (‘Forward Statements’). No independent third party has reviewed the reasonableness of any such statements or assumptions. No member of CNI represents or warrants that such Forward Statements will be achieved or will prove to be correct or gives any warranty, express or implied, as to the accuracy, completeness, likelihood of achievement or reasonableness of any Forward Statement contained in this announcement.
1 AUM as at 31 December 2018 with pro forma adjustments to reflect Centuria Heathley Transaction
2 Australian Institute of Health and Welfare – Health Expenditure Australia 2015-16. Figures exclude aged care