Centuria Healthcare Property Fund acquires $167m portfolio
Fund portfolio increases 95% to $342m
- Pure play unlisted healthcare fund; Seven acquisitions worth c.$167 million, 5.0% blended passing yield
- Diversified portfolio across mental health, short stay hospitals and medical centres; Australia-wide
- Increases Fund’s total portfolio to 14 properties worth $342.3 million1, 100% occupancy, 11.4 year WALE2
- Completed fourth capital raising of $62.4 million for the open-ended CHPF.
Centuria Healthcare has further expanded its unlisted open-ended fund, Centuria Healthcare Property Fund (CHPF), with a seven asset portfolio acquisition worth c. $167 million on a weighted average passing yield of 5.0%.
The acquisitions3 almost double CHPF’s total portfolio value (95% increase) to $342 million with 14 properties and lengthens its WALE from 7.4 years to 11.4 years4. Occupancy remains at 100%. CHPF has a further $11.7 million pipeline due to settle in October, which will increase the fund’s value to $354 million5.
The current transactions diversify CHPF into mental health real estate, with assets including a $50.1 million mental health hospital, a $12 million mental health outpatient centre and two dementia care residences worth $7.4 million. In addition, CHPF acquired a private, short-stay hospital worth $60.5 million, a $8.45 million rehabilitation hospital and a $28.6 million medical centre.
Andrew Hemming, Centuria Healthcare Managing Director, said, “We are pleased to expand CHPF not just with additional high-quality assets, but with assets that further geographically diversify the portfolio as well as diversify the fund into mental health. The portfolio acquisitions are all institutional-grade healthcare properties, which are also underpinned by leases to a diversified range of leading healthcare operators – both private and public.”
CHPF secured the $50.1 million Perth Clinic, located at 21-29 Havelock Street, West Perth WA, on an 11.6 year WALE6. It is Perth’s largest mental health hospital, 100% leased to a 25 year established operator, Perth Clinic. The tenant provides a range of mental health services including, inpatient programmes, day programmes and specialised treatments. Perth Clinic comprises two adjoining buildings, providing a three-level mental health hospital, three levels of consulting suites and an office building with a total 4,856 sqm of net lettable area (NLA).
The mental health outpatient centre acquisition is located at 411 Nepean Highway, Frankston VIC. The $12 million property, built in 2016, is 100% leased to a Victorian State Government public health service, Peninsula Health, on an eight year lease. The asset comprises a three-storey facility with a 1,577sqm NLA.
Both dementia care residences are fund-through projects. The sites are situated at 18 Lisa Crescent and 35 Chiltern Crescent within Sydney’s north-west suburb, Castle Hill. They are both 100% leased to Group Homes Australia (GHA) on a 15 year term. Each will accommodate up to 10 residents with dementia and will be operational by Q2 FY23.
Mr Hemming, said, “Mental health hospitals, for both inpatients and outpatients, are a major growth area within the healthcare sector. Equally, dementia care operators that provide personalised, non-institutionalised homes – such as GHA – are growing in demand.”
The short-stay hospitals include a $60.5 million fund-through development of the new Weststate Private Hospital in Townsville’s West End, QLD. The development, located on the corners of Wilson Street, Lamington Road and Sturt Street, will amalgamate six land parcels into a single c.8,000 sqm mixed-use site. Development approval has been received to complete a five-storey, purpose-built hospital, complete with four operating theatres, one procedure room, 19 day beds and 22 overnight beds. The property is pre-leased on a 25 year lease to Weststate, a newly established operator including three founding specialist surgeons as well as a cohort of medical professionals and investor associates.
CHPF’s other recently acquired short-stay hospital is the $8.45 million MetroRehab Hospital, located at 175 Addison Road, Petersham in Sydney. The 1,850 sqm, 37 bed property is 100% occupied and secured on a 13.2 year WALE7. The operator provides rehabilitation care for stroke recovery, Parkinson’s treatment, brain injury and neurological and cancer rehabilitation.
Mr Hemming, explained, “These hospitals align with CHPF’s investment strategy to acquire healthcare properties that utilise effective models of care within markets with strong demand. Weststate, in particular, concentrates on best practice patient care that also lowers out-of-pocket expenses. This will be a game-changer for the North Queensland private healthcare market.”
CHPF has also secured the $28.6 million Sunbury Medical Centre at 38-44 Gap Road, Sunbury VIC, which is 100% occupied and provides a 7.7 year WALE8.
The pure-play unlisted healthcare fund recently completed its fourth capital raise, securing $62.4 million in investments. To date, the Fund has successfully been fully subscribed for all its equity raises, collectively generating more than $192 million in investment.
Mr. Hemming concluded, “Since CHPF launched a year ago, it has generated strong traction from investors seeking to benefit from this resilient asset class, which provides relatively stable income streams. Our open-ended fund enables investors to benefit from the healthcare real estate sector’s strong tailwinds, which is why each of its fundraises have been fully subscribed to date.”
Since its inception in August 2020, CHPF has delivered an 8.00% total return to existing investors9 and a weighted average capitalisation rate (WACR) of 5.33%10. It has a target distribution rate of 5.50cpu in FY2211.
CHPF’s portfolio has four distinctive sub-market including short-stay and day hospitals, specialist centres, medical centres and mental health properties.
Independent valuations of CHPF properties provided a $6.2 million gain (+3.6%) as at 30 June 2021. The Fund also recently secured a new 20 year lease with Nexus Hospitals at its Vermont South Private Hospital, VIC, and a 10 year lease extension with BGH Capital at Forrest Family Practice, South Bunbury, WA12.
|Properties||State||Property Type||Purchase Price||Passing Yield||NLA (sqm)||WALE (yrs)||Occupancy|
|411 Nepean Highway,
|Weststate Private Hospital, 2-14 Wilson Street, West End,
|QLD||Short Stay Hospital||$60.5m13||6.00%||8,803||25.0||100%|
|MetroRehab Hospital, 275 Addison Road, Petersham||NSW||Short Stay Hospital||$8.45m||5.09%||1,850||13.2||100%|
|Sunbury Medical Centre, 38-44 Gap Road, Sunbury||VIC||Medical Centre||$28.6m||4.49%||1,884||7.7||100%|
|GHA, 18 Lisa Crescent, Castle Hill||NSW||Dementia Care||$3.7m13||5.75%||N/A14||15.0||100%|
|GHA, 35 Chiltern Crescent, Castle Hill||NSW||Dementia Care||$3.7m13||5.75%||N/A14||15.0||100%|
|Total / Weighted Average||$167.05||5.02%||18,970||15.75||100%|
Perth Clinic was sold via a public Expressions of Interest campaign, marketed by JLL’s Simon Quinn and Nigel Freshwater along with CBRE’s Derek Barlow and Aaron Desange.
Genera45’s Daniel and Chris Steffe acted for the vendors of the Frankston mental health outpatient centre and Weststate Private Hospital.
Colliers Shalain Singh acted for the vendors of the Sunbury Medical Centre.
1. As at 30 June 2021
2. WALE by income as at 30 June 2021
3. Acquisitions refer to properties exchanged and contracted
4. By income
5. CHPF has exercised a call option for the development of the WEST Medical Hub in Westlakes, South Australia, as previously report in November 2020. The property will be settled in October 2021.
6. WALE by income as at 30 June 2021
7. WALE by income as at 30 June 2021
8. WALE by income as at 30 June 2021
9. Return since inception (21 September 2021) to31 August 2021. Return is not annualised. Past performance is not a reliable indicator of future performance.
10. As at June 2021
11. 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.
12. Within FY21 Q4
13. Reflected As If complete valuation
14. 10 bed dementia care house
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.