Real Asset Management secures private hospital portfolio
Australian-owned asset manager Real Asset Management (RAM) has acquired a parcel of three strategically located regional hospitals for AUD100 million as it considers listing an essential services REIT on the Australian Securities Exchange next year.
The hospitals which were previously owned by Canada’s Northwest Healthcare Properties include the 70-bed North West Private Hospital in Cooee Tasmania, the purpose-built 54-bed Dubbo Private Hospital in Dubbo NSW and the 79-bed Mayo Private Hospital in Taree New South Wales. The purchases bring the total value of RAM’s essential services property portfolio to approximately $500 million.
The three assets are all leased to Australia’s third largest private hospital operator, Healthe Care, with weighted average leases of 15 years each and annual rent increases, providing steady rental growth and a sustainable and secure income yield to the portfolio.
With the new acquisitions RAM’s essential services property portfolio now spans 13 essential services neighbourhood retail centres and six medical properties, four of which are private hospitals.
Director and Head of Real Estate Will Gray says RAM had taken its time and had been quite selective before proceeding with the purchase, adding that private and day hospitals of the quality of those obtained were rarely available. Each hospital is strategically located in a major regional health hub, supported by significant government investment.
“We have been actively working on this transaction for almost 12 months and see it as highly attractive to our investors given the long term sustainable and resilient income yield on offer in a high growth real estate sector.
“Australia is looking at long-term sectoral demand around the need for medical and healthcare service-based assets. The provision of private healthcare services, including the assets they occupy will only increase in demand as the public healthcare sector continues to be burdened by high patient demands and ageing assets.
“Accordingly, we are only now just starting to see the commencement of significant institutional demand to participate in the healthcare or medical property space,” Gray says.
RAM Managing Director and Chief Executive Scott Kelly said the high-quality acquisition was a welcome addition to RAM’s essential services portfolio.
“Over the past five years we have been judiciously assembling a portfolio of smaller neighbourhood-based retail and medical assets, which is now worth around half a billion dollars. Record low rates and essential services-based tenure, among other factors, is supercharging investment demand for these types of assets, and so we plan to provide for that with some exciting capital markets initiatives in mid-2021,” Kelly says.
Simon Quinn, Director of Alternate Investments at JLL brokered the transaction.