4 November 2020

Centuria Healthcare Settles $115m worth of Real Estate

Centuria Healthcare has settled approximately $115m worth of day and short-stay hospitals for its recently launched open-ended unlisted Centuria Healthcare Property Fund (CHPF).

The geographically dispersed assets that were settled within the past three weeks include three day and short-stay hospitals: the $55.5m Bloomfield Medical Centre in Orange, NSW, the $51.7m Vermont South Medical Centre in Vermont South, VIC, and the $5.6m Hobart Day Surgery, TAS.

The assets are part of an initial property portfolio worth more than $155m.

CHPF already owns the $6.4m Forrest Family Practice, South Bunbury WA. The Fund is also contracted to acquire the $12.7m Murrumba Village Medical Centre in QLD; and has call options on a $11.8m South Australia medical centre, WEST Medical HQ in West Lakes, and a $12.7m Western Australian day hospital, Sundew Day Surgery in Joondalup.

Andrew Hemming, Centuria Healthcare Managing Director, said, “Throughout 2020, healthcare real estate has come into the spotlight with COVID-19 highlighting the sector’s unmet demand. We’ve 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. 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.”

With a starting distribution rate of 5.75 cents per unit[i], CHPF was fully subscribed quickly and the fund temporarily suspended to new applicants from 30 September 2020.

However, the fund will have a limited reopening to acquire additional healthcare properties on Thursday 12 November.

Centuria Healthcare has indicated its acquisition strategy is in part driven by operator partnerships.

Hemming, continued, “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 from our peers 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.”

As part of the CHPF’s structure, Nexus Property Unit Trust (NPUT), and its specialist doctors, retain up to 15% of all Nexus Hospitals-anchored properties. Nexus Hospitals own or manage the Bloomfield Medical Centre, Vermont South Medical Centre, Hobart Day Surgery and Sundew Day Surgery.

Leading operators within the portfolio include QIC backed, Nexus Hospitals, ASX-listed, Healius Limited, national pharmacy-retailer, Priceline, and Medical Miracle.

CHPF’s current portfolio is 100% occupied with a 5.7 year Weighted Average Lease Expiry (WALE), as at 31 October 2020. The fund is due to pay its first monthly distribution on 10 November 2020.

CHPF properties include:

Value Location Type Asset Operator Status
$55.5m Orange, NSW Short-stay Hospital Bloomfield Medical Centre Nexus Hospitals Settled
$51.7m Vermont South, VIC Short-stay Hospital Vermont South Medical Centre Nexus Hospitals Settled
$5.6m Hobart, TAS Day Hospital Hobart Day Surgery Nexus Hospitals Settled
$6.4m South Bunbury, WA Medical Centre Forrest Family Practice Healius Settled
$12.7m Murrumba Downs, QLD Medical Centre Murrumba Village Medical Centre Priceline Contracted
$12.7m Joondalup, WA Day Hospital Sundew Day Surgery Nexus Hospitals Call Option
$11.8m West Lakes, SA Medical Centre WEST Medical HQ Medical Miracle Call Option

[i] The advertised starting distribution rate is not a forecast, and merely represents the distribution rate the Fund intends to distribute. It is therefore predictive in nature and is subject to assumptions (including the assumption that the pipeline assets will be acquired by the Fund), risks and circumstances (both known and unknown) outside of the control of Centuria Healthcare Pty Ltd and Centuria Property Funds No. 2 Limited. The actual returns may differ from the starting distribution rate. Centuria Healthcare Pty Ltd and Centuria Property Funds No. 2 Limited do not guarantee the performance of the Fund, the repayment of capital or any income or capital return. The actual distributions paid in cents per unit will be updated on a monthly basis and made available at centuria.com.au/CHPF.