Investors - JUNE 28, 2017

Dexus Property establishes healthcare JV with Commercial & General

by Andrea Waitrovich

Australian REIT Dexus Property Group has formed a joint venture with Adelaide-based developer Commercial & General to form a wholesale-unlisted healthcare fund.

The new fund, known as the Australian Healthcare Property Fund, will be seeded with approximately A$370 million ($283 million) of properties (on completion value) including the Adelaide Calvary Hospital (under development) and GP Plus Healthcare Centre in Adelaide. In addition to the seed assets, the new fund has a pipeline of further opportunities of approximately A$390 million ($216 million), on completion value, located in other states including NSW and Queensland.

The responsible entity of the fund will be wholly owned by Dexus as part of the group’s funds management platform. As part of the joint venture, Dexus and C&G will co-invest in the fund and establish a jointly owned investment manager. Dexus’s initial co-investment will be approximately A$80 million ($61 million).

The establishment of the joint venture and the fund is in line with Dexus’s strategic objective of being a wholesale partner of choice in Australian property.

The Adelaide Calvary Hospital is a 614,000-square-foot private hospital currently under construction. Construction of the hospital commenced in May 2016 with completion expected in the first half of 2019.

And GP Plus Healthcare Center is completed.

Healthcare property provides an opportunity for Dexus to drive long-term returns through leveraging capabilities of the Dexus platform across transactions, development, leasing and investment management.

Marketing of the new fund is expected to commence in July 2017 with a view to launching the fund by the end of 2017.

The Australia healthcare sector is under-invested and offers a significant long-term opportunity. Demand for healthcare services is being driven by favorable population demographics, and due to its nondiscretionary nature, the sector is less exposed to cyclical impacts than other property types.

The healthcare sector comprises an estimated A$125 billion ($95 billion) of assets in Australia, with hospitals and medical centers alone equating to a sector comparable in size to the industrial property market.

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