NorthWest Healthcare Properties creates A$2b Australia venture

NorthWest Healthcare Properties REIT has entered into a joint venture agreement with a large sovereign wealth fund.

With an indefinite term and an aggregate gross commitment of A$2 billion ($1.5 billion/debt and equity), the mandate of the joint venture is to acquire and develop high-quality core Australian healthcare real estate, including hospitals and related medical office buildings.

The joint venture will be 70 percent owned by the sovereign wealth fund with the REIT owning the remaining 30 percent interest and acting as investment, property, development and asset manager for which it will be entitled to earn market-based management fees, as well as a potential performance fee, subject to achieving certain return thresholds.

The joint venture commitment is expected to be fully deployed over a four-year period and once fully deployed, the REIT expects to benefit from third-party fee bearing assets under management of approximately A$1.4 billion ($1.04 billion).

As part of the joint venture commitment, the REIT has also agreed to sell three income-producing properties and one development property to the joint venture with an as‑complete value of approximately A$412 million ($305 million). The REIT will redeploy net proceeds after repayment of property-level financing from the Seed Portfolio sale of approximately A$180 million ($133 million) to fund future joint venture acquisitions, as well as pursue additional global investment opportunities.

The Seed Portfolio sale, which is subject to Australian Foreign Investment Review Board approval, is expected to close in third quarter 2018.

Details of the Seed Portfolio are outlined below.