Centuria Healthcare fund adds $71.3m of acquisitions
- Centuria Healthcare Property Fund expands to 18 properties worth c.$414m1: 11.8 year WALE2, 99.1% occupancy3
- Secured: $51m refurbished laboratory in VIC4 and a newly built $13m medical centre in SA
- Settled: dementia care properties worth $7.3m in NSW
- $34m equity raise to support expansion.
The Centuria Healthcare Property Fund (CHPF) has further expanded its fast growing portfolio with a $51 million In Vitro Diagnostic Manufacturing Laboratory at Mt Waverley VIC, $7.3 million worth of dementia care residences in St Ives, Sydney, and a $13 million medical centre development in West Lakes, SA.
The acquisitions further diversify the unlisted, open-ended healthcare real estate fund by location, tenant profile and property type, providing an 11.8 year2 Weighted Average Lease Expiry (WALE) and 99.1% occupancy3. CHPF’s portfolio includes 18 assets worth $413.8 million1.
Andrew Hemming, Centuria Healthcare Managing Director, said, “We are pleased to announce further expansion of our rapidly growing healthcare fund and the introduction of a new healthcare asset class into our portfolio – life science laboratories.
“The development and manufacturing of in-vitro diagnostics will continue to experience tremendous growth, accelerated by the COVID-19 pandemic due to the volume of health screening required from nasal/saliva swabs to blood tests. With a focus on diagnostics, we believe this is an area that will continue to be in high demand, requiring state of the art facilities.
“The pandemic has also shone a spotlight on Australia’s developing healthcare sector. We are partnering with the country’s leading operators to provide healthcare facilities that meet the requirements of the community today and in the future.”
|Property||State||Value||Passing Yield||Size (sqm)||WALE2 (years)||Occupancy3|
|77-97 Ricketts Road, Mt Waverley||VIC||$51.0m4||4.80%5||8,048 GLA||14.8||93.5%|
|49 Benaroon Avenue, St Ives||NSW||$3.3m||5.00%||7 beds||20.0||100%|
|3 Garrick Road, St Ives||NSW||$4.0m||5.00%||10 beds||20.0||100%|
|WEST Medical HUB, Charles Street, West Lakes||SA||$13.0m||6.15%||2,092 NLA||6.8||100%|
|Total/ Weighted Average||$71.3m||5.07%||n/a||13.9||95.4%|
The $51 million Mt Waverley acquisition is a repositioning of an existing facility to provide specialist laboratories and office accommodation. The property will be c.90% leased (by GLA) to ASX-listed Paragon Care Ltd (ASX:PGC) for a 15 year term and c.3.7% leased to FIMMA, a private construction company, whose lease expires in April 2025. Refurbishment works begin in April 2022 and will include a specialised fit-out complemented by sustainable features such as solar panels. The asset is anticipated to settle in late December 2021.
CHPF continues to expand its dementia care residence portfolio, settling two fund-through developments in St Ives, Sydney. A single storey house, at 3 Garrick Road, is providing accommodation for 10 dementia-afflicted residents and an onsite carer while 49 Benaroon Avenue is a two level residence accommodating eight dementia patients and a carer.
Centuria Healthcare first announced the WEST Medical Hub in November 2020 as a turnkey call option with the $13 million property due to settle in December 2021. It is positioned within Commercial & General’s masterplanned community, surrounded by 1,300 new residences and a new Uniting SA aged care facility.
Mr Hemming concluded, “Within the past 12 months CHPF has increased its portfolio by 198%, largely driven by investor appetite for modern, high quality healthcare properties that provide favourable leasing covenants including long leases and blue chip tenants.”
Since the beginning of FY22, CHPF has benefitted from a $6.2 million valuation uplift. During this period, it also secured three significant leasing transactions including a 20 year lease to Nexus Hospitals across c.2,800sqm at Vermont South Medical Centre (Vermont South VIC), a 10 year lease to BGH Capital across 890sqm at Forrest Family Practice (South Bunbury WA), and two five year lease extensions to I-MED Radiology and Sonic Healthcare across 700sqm at Coffs Medical Centre (Coffs Harbour NSW).
CHPF provides daily unit pricing, limited quarterly withdrawals6 and a liquidity event every five years. It has an annual target distribution rate of 5.50 cents per unit (CPU)7 in FY22 and has provided an 8.6% total return8 during the past 12 months.
The unlisted fund has recently opened to receive investment with a capital raise target of $34 million. The fund will be open between 22 November 2021 and 10 December 2021.
CBRE’s David Aiello and Sasan Misaghian acted for the vendors of 77-97 Ricketts Road, Mt Waverley, VIC.
1. Includes 85% direct interest in Bloomfield Medical Centre, Vermont South Medical Centre and Sundew Day Surgery and Hobart Day Surgery and the indirect investment in these properties via Nexus Property Unit Trust. Subject to the tranche 5 capital raise and acquisition of two assets, on an as-if complete value
2. As at 30 September 2021 and includes rental guarantees
3. As at 30 September 2021 and Includes Rent Guarantees
4. Value based on an “As If” complete basis.
5. Yield on cost. Core Cap Rate is 4.125%
6. Limited to the terms detailed in the PDS and are subject to the CHPF’s liquidity policy. The ability of CHPF to offer quarterly redemptions is not guaranteed.
7. The target distribution rate is not a forecast, is predictive in nature and is subject to assumptions, risks and circumstances (both known and unknown) outside of the control of Centuria Property Funds No. 2 Limited. These assumptions include that the pipeline properties will be acquired by CHPF and that funding will be secured at a particular interest rate. The actual returns may differ from the target return Centuria Property Funds No. 2 Limited do not guarantee the performance of CHPF, the repayment of capital or any income or capital return.
8. One year return on an annualised basis to 31 October 2021. Annualised total return figures are the sum of the annualised income return and the annualised capital return (each calculated on a standalone basis), Past performance is not a reliable indicator of future performance.
9. Including fund-through projects on an ‘as-if complete’ basis.
Centuria Capital Group secures a $70.6million industrial logistics facility in North Rocks, NSW, on behalf of US private investment firm, Starwood Capital’s, Last Mile Logistics Partnership (LMLP).
Centuria Capital Group has successfully exchanged conditional contracts to divest two adjoining industrial facilities located at 114 and 120 Old Pittwater Road, Brookvale NSW, which is anticipated to deliver a forecast 13.8% IRR to the assets’ closed-ended fund investors.