Australia’s Healthscope to sell hospital portfolio for A$2.5bn

Australian private healthcare operator Healthscope has agreed to sell 22 hospitals to North American investors NorthWest and Medical Properties Trust for a combined A$2.5bn.

Both sale-leaseback deals hinge on the completion of Canadian investment manager Brookfield’s A$4.4bn takeover of the company, Healthscope said in a statement.

US REIT MPT and Toronto-listed NorthWest will gain 11 hospitals each under the agreement.

The leases have a weighted average expiry of 20 years and will incur fixed annual rent increases of 2.5% per annum, NorthWest said in a separate announcement.

Both buyers will also have opportunities to expand and redevelop assets under their lease agreements.

MPT may invest up to approximately A$491m for expansion and development projects in 2019 and future years, while NorthWest’s portfolio has as much as A$555m worth of initial brownfield development and capex opportunities over 10 years.

“With the portfolio including a diversified mix of acute, rehabilitation and psychiatric hospital facilities primarily located in major metropolitan centres of Melbourne, Sydney, and Brisbane, Australia is a core market for NorthWest and this transaction enhances our market leading position as the real estate partner of choice for Australian hospital operators,” said NorthWest Chairman and CEO Paul Dalla Lana.

MPT chairman and CEO Edward K. Aldag, Jr. added: “Not only will long-term inflation-protected rents from these highly sought assets be strongly accretive to FFO per share, the transaction will further improve MPT’s tenant and geographic diversification measures.”

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