Dexus Property Group and Adelaide-based property developer Commercial & General (C&G) have teamed up to establish an unlisted healthcare fund.
The fund, named the Australian Healthcare Property Fund, is to be seeded with around A$370 million ($282 million; €248 million) of properties, including the Adelaide Calvary Hospital and GP Plus Healthcare Centre in Adelaide. In addition to the seed assets, the pair have a pipeline of assets with a completion value of approximately A$390 million.
“We are pleased to partner with C&G and look forward to continuing to build scale in the growing healthcare sector which will benefit from the underlying mega-trends of population growth and an ageing demographic. We see this property asset class as a logical extension to our funds management platform,” commented Darren Steinberg, chief executive at Dexus.
According to Dexus, the healthcare sector comprises an estimated A$125 billion of assets in Australia, with hospitals and medical centers alone equating to a sector comparable in size to the industrial property market.
The firm added that 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 asset classes.
Graham Pearson, Dexus’ executive general manager of funds management said: “Healthcare property assets and their locational drivers share the same characteristics with the office and retail property sectors. In addition, they offer longer term leases, often beyond 20 years, that are structured to remove the property owner from operational management responsibilities, providing attractive risk-adjusted returns.”
Through a joint venture agreement Dexus and C&G will co-invest in the fund and establish a jointly-owned investment manager, with Dexus making an initial co-investment of approximately A$80 million.
Marketing of the fund is expected to commence in July 2017 with a view to launching the fund by the end of 2017.
Dexus, which only invests in Australia, has a property portfolio valued at more than A$22 billion. The firm directly owns A$11 billion of office and industrial properties and manages a further A$11.7 billion of office, retail and industrial properties for third party investors.