Dexus pushes into healthcare with Adelaide Bragg Centre purchase
Office heavyweight Dexus has flagged a significant push into healthcare property and has teamed with its specialist fund to snap up the Australian Bragg Centre in Adelaide from private developer Commercial & General for $446.2m.
Dexus company is making a big push into health and is the largest listed player in the area, although others including Centuria Capital, Australian Unity and offshore players are also active.
Buying hospitals and medical facilities also helps diversify risk at a time when conventional assets like shopping centres and lower grade office towers are under pressure.
Dexus joined with its Healthcare Wholesale Property Fund to buy the centre in a 50/50 deal that will see them take full control of the asset when it is finished.
At the price the purchase is one of the largest single-asset private healthcare acquisitions in Australia and positions Dexus to take on larger portfolio-style assets.
Dexus CEO Darren Steinberg. Picture: Britta Campion
The building, also known as SAHMRI 2, is a clinical and research facility in Adelaide’s $3.6bn BioMed City precinct, incorporating world-class facilities for cutting edge research by local institutes, and lab and office space for biomedical companies.
The building will house Australia’s first proton therapy unit, specialising in next generation cancer treatment. It will sit in a purpose-built bunker and is being supported by federal and state government funding.
The building, which is currently under development, is 77% pre-leased to customers either backed or supported by the SA government, with a weighted average lease expiry of almost 22 years from completion in August 2023.
Acquisition terms include a two-year rental guarantee provided by Commercial & General over the remaining space to be leased. On completion, the Australian Bragg Centre will increase Dexus’s group healthcare exposure to more than $1bn and grow the health fund’s portfolio to $900m.
“This transaction accelerates the growth of our funds management platform and is a step towards our goal of being a partner of choice in Australian healthcare property. It also increases Dexus’s portfolio diversification, providing exposure to a sector with strong tailwinds,” Dexus chief executive Darren Steinberg said.
Commercial & General chief executive Trevor Cooke said the purchase was a vote of confidence by the institutional market in the South Australian economy and built on the company’s longstanding relationship with Dexus.
The pair were early movers in healthcare property and in 2017 set up a venture to set up an unlisted healthcare fund, which was seeded with about $370m of properties including the Adelaide Calvary Hospital and GP Plus Healthcare Centre in Adelaide.
Dexus, which has full control of the health fund, last year also sold the first stage of the North Shore Health Hub to its health fund in a $224m deal.
This article originally appeared on www.theaustralian.com.au/property.
