Peace deal struck over $4bn health trust as Canadian raider to exit

Australian Unity Healthcare Property Trust has paid $26.2m for the Campus Alpha building at 2 Investigator Drive, Robina.

The end of the two-year battle over the near $4bn Australian Unity Healthcare Property Trust is in sight, with Canadian group NorthWest Healthcare Properties settling legal action against the trust manager and flagging an exit from its 16 per cent stake.

The move clears the way for the fund to set its course with listed group Dexus, which emerged as a white knight in the stoush for control of the vehicle in 2021, to also play a hand as it has an alliance with the trust.

Dexus may also look to add to its holding in the fund as it has emerged as a major player in healthcare property, but NorthWest’s sell down strategy is yet to be determined.

The trust was kicked into play in 2021, when Northwest snared a major stake on the register, and agitated against the management, launching legal action and several hostile bids for the unlisted fund.

Dexus then took a $180m cornerstone investment in raising launched by Australian Unity as it defended the healthcare fund, and the listed group also received a first right over the trust’s management platform.

Australian Unity Healthcare Property Trust has paid $26.2m for the Campus Alpha building at 2 Investigator Drive, Robina.

The trust rejected a sweetened $2.8bn bid from NorthWest, backed by Singaporean sovereign wealth fund GIC, in mid-2021. NorthWest then pulled the hostile bid after a court hearing in July that year, as its takeover failed to win over unit holders.

In the legal case, NorthWest argued that Australian Unity acted in excess of its powers under the trust constitution and for an improper purpose and failed to prioritise the interests of unit-holders over its own.

It also sought to challenge Australian Unity’s platform agreement and development co-operation agreement with Dexus on the basis they were not fully disclosed when Dexus took its stake. NorthWest alleged this had the effect of treating Dexus more favourably than other unit holders and entrenching Australian Unity’s control over the trust.

Australian Unity and Dexus recently had a win over NorthWest’s attempts to expand its claim. But the case has just been settled.

“The parties to the litigation commenced by Northwest against Australian Unity Funds Management Limited … have agreed to settle the litigation,” Australian Unity said. “AUFM and other Australian Unity entities have agreed to … assist Northwest and affiliates to divest their units in AUHPT by 31 December, 2023.”

The Australian Unity trust this year undertook a major capital raising, giving it the firepower to expand further. Last December, it bought the land and residential aged care buildings at nine sites in SA from residential aged care operator Bolton Clarke for $220m and has bought other medical assets.

It is also investing in critical social and healthcare infrastructure and last month picked up a 7.5-hectare site near the Melton Hospital project in Melbourne and is expanding the Sunshine Private Hospital. The trust also entered a binding agreement to divest of rights to develop Herston Quarter Private Hospital in Queensland for $13m.

In late June, the trust’s gearing ratio was 26.1 per cent and the gross assets stood at $3.97bn with total borrowings of $1.04bn.