Listed property trust (or A-REIT) Dexus (ASX: DXS) today announced that it taken a small stake in Heathley Limited, the manager of Heathley Healthcare REIT. Heathley Healthcare REIT owns 42 healthcare assets across Australia and Dexus will also take a cornerstone investment in it.
This transaction is another step by Dexus, Australia’s largest office landlord, to diversify into healthcare properties. Just last year Dexus set up its unlisted Healthcare Wholesale Property Fund which, if it successfully acquires projects in its pipeline, will have around $830m in funds under management.
Heathley Healthcare REIT owns healthcare properties leased to tenants including Primary Health Care (ASX: PRY) and Sonic Healthcare (ASX: SHL) and plans to list on the ASX (ASX: ASX) later this year.
Healthcare listed property trusts or REITs are a well-established asset class in the United States but are still a nascent and relatively undeveloped asset class here in Australia.
So if the Heathley Healthcare REIT IPO goes ahead, it will be good to see another healthcare REIT on the ASX after Canada’s NorthWest Healthcare Properties REIT acquired Generation Healthcare REIT and delisted it in 2017.
Healthcare listed property trusts are part of the diversification of options open to investors in the listed commercial property space that has been a feature of the Australian market in recent years.
For example, stalwarts such as Dexus and GPT (ASX: GPT), which owns shopping centres, office towers and industrial sheds, have been joined in recent years by owners of self-storage units (National Storage REIT (ASX: NSR)), petrol stations (Viva Energy REIT (ASX: VVR)) and data centres (Asia Pacific Data Centres (ASX: AJD).
This is only a good thing for those looking to diversify their exposure to commercial property.
Meanwhile, listed hospital owner and operator Healthscope (ASX: HSO) is also looking to monetise its properties.
After being targeted by private equity, Healthscope announced that it plans to hive off “the majority” of the company’s freehold hospital assets in a sale and leaseback transaction.
Healthscope will sell these properties into an unlisted property trust in which it will keep a 51% stake and has requested offers for the minority 49% stake from interested parties.
One interested party is Generation Healthcare acquirer NorthWest Healthcare Properties REIT, which has acquired a 10% interest in Healthscope itself. NorthWest noted that “an acquisition of Healthscope’s underlying hospital real estate is of interest” to both it and its partner, New Zealand listed Vital Healthcare Property Trust (NZX: VHP).
With the properties Healthscope proposes to sell and leaseback likely having a market value materially in excess of their $1bn book value, this transaction makes sense for its shareholders.
In any case, healthcare properties continue to gain more traction as an investable asset class for Australian investors.
And with both Australia’s population and elderly Australians’ longevity continuing to grow, demand for healthcare services – and hence demand from investors for the healthcare properties where these services are provided – is likely to steadily grow too in coming years.