Mount Hospital, the 224-bed acute private hospital on Mounts Bay Road, was recently sold for $147 million to the property investment group Healthco Healthcare & Wellness REIT, part of a national acquisition program that will see the group purchase 11 private hospitals in a deal worth $1.2 billion.
Four hospitals specialising in mental health and rehabilitation will be held by HMC, with the other seven earmarked for an equal partnership with another fund set to join the market, Healthcare and Life Sciences Unlisted Trust.
The move comes just a few months after Healthscope, which operates Mount Hospital, announced a $35 million upgrade of the site, in conjunction with the previous owner, the US-based MPT Australia Services, which had also purchased the 11 hospitals for $1.2 billion back in 2019 – including nearly $200 million for the Mount.
The original master lease agreement with MPT included provisions to invest up to an additional $350 million for expansion and redevelopment projects across the portfolio, which MPT listed following the group’s share price tanking from $US23.74 down to just $US7.41.
HealthCo Healthcare and Wellness REIT was only listed on the ASX two years ago, following a successful launch buying up the abandoned Masters’ hardware chain – after its failed bid to take on the behemoth that is Bunnings – with the sites redeveloped as retail hubs housing numerous chain stores.
Mr Sam Morris, a senior portfolio manager at HealthCO, said that despite the issues impacting MPT, HMC believed that the Healthcare sector was “opportunity rich and supported by and supported by favourable megatrends, which will underpin long time demand for health care services – irrespective of the market and economic cycle.”
“The investment opportunity is significant, with over $200 billion of existing healthcare, real estate in our target sectors and well over $90 billion of new investment required to meet demand over the next 20 years,” he said.
“Our recent acquisition of the Healthscope hospital portfolio saw us take advantage of a rare opportunity to secure a large-scale portfolio of 11 private hospitals, which represent critical healthcare infrastructure in Australia’s major capital city.
“This was the largest healthcare real estate transaction since 2019 and demonstrates our ability to execute large, complex transactions for our capital partners.
“The key reasons we think this portfolio will deliver exceptional risk adjusted returns and outperform other real estate asset classes include the compelling total returns with 5.8% NOI yield and a forecast unlevered IRR of 9% inflation protection 100% of the leases are CPI indexed.”
Mount Hospital opened its upgraded Cardiac Cath labs, the first stage of the redevelopment, in August this year, with the full project due for completion in the first half of 2024. The full upgrade will include:
- A new waiting and reception area
- A retail pharmacy
- The addition of a new day surgery admission and reception area on Level 1.
- Redevelopment of Level 2 to have 35 private rooms with ensuite and a new Clinical Support Services area.
“The Mount is one of the busiest cardiac centres in Australia. The new/upgraded labs now mean that we have access to the latest cardiac imaging equipment and technology,” said Dr Chris Judkins, the Director of Training and Research at the Mount.
“The new technology in the Cardiac Cath Labs provides doctors better image quality at a lower radiation dose, as well as allowing for the integration of additional tools into the new system. This will allow doctors to have access to more information for decision making to ultimately improve patient outcomes.”
As of writing, seven jobs at Mount Hospital were still being advertised on SEEK.