NorthWest plots $600m Geelong healthcare precinct
Canada’s NorthWest Healthcare Properties REIT, partnered by Epworth Healthcare, is planning a $600 million innovation, education and healthcare precinct in Geelong, Victoria’s second largest city, in one of the largest such developments yet outside a state capital.
As part of three related deals, NorthWest will take a half stake, alongside the hospital operator, in a 4.2-hectare plot of land next to the existing Epworth facility, where the pair aim to build out 100,000sq m of real estate over the next decade.
That plan will bring together health services, researchers, technology and industry partners into one precinct. Nearby, Deakin University’s Waurn Ponds Campus offers the prospect of further research and collaboration opportunities, according to Craig Mitchell, NorthWest’s chief executive for Australia and New Zealand.
NorthWest’s move adds to the increasing pool of capital flowing into the burgeoning sector, with major players including ASX-listed Dexus, Centuria and HomeCo also active.
“Everyone is excited by healthcare: a growing market, an ageing population, people are living longer and unfortunately suffering more chronic diseases as they get older,” Mr Mitchell told The Australian Financial Review.
“COVID-19 has accelerated a lot of things. Virtual care and funding models have fundamentally changed, [as well as] telehealth, medical technologies, private equity investment into healthcare. There has been a huge shift and acceleration.”
The Canadian investment powerhouse has struck a package of deals worth $127.6 million in all. It has taken a 50 per cent stake in the existing Epworth Geelong hospital in Waurn Ponds for $89.8 million along with $15 million outlaid for an interest in the adjoining land.
Exciting pipeline
As well, NorthWest has bought one of the Epworth properties at Richmond, in inner-city Melbourne, for $22.8 million, with a further $5 million option for the air rights to further develop the site.
“All three transactions play to our core expertise, strengthening our relationship with Epworth, and unlocking an exciting pipeline of new health infrastructure at two major new precincts,” Mr Mitchell said.
Dr Lachlan Henderson, Epworth Group chief executive, said the agreement would release capital to support long-term sustainability for the operator.
“The agreement enables Epworth to focus on targeted growth, our ambitious digital program and innovation to deliver better outcomes for our patients,” he said.
NorthWest has around $5.5 billion in funds under management in the Australian and New Zealand markets. Roughly half of that is with the New Zealand-listed Vital Healthcare Property Trust, and the other half with a wholesale partnership NorthWest has with Singaporean sovereign investor GIC.
The related deals and the ambitious development plan at Geelong have been nailed together just four months after NorthWest’s repeated takeover offers for the Australian Unity Healthcare Property Trust were rebuffed.
Those efforts culminated in a $2.8 billion proposal which Australian Unity rejected in mid-June. The campaign, however, has left the Canadians as the largest investor in the 62-asset portfolio of medical and health-related properties.
“We are very happy with our 17.5 per cent stake, and we are not going anywhere,” Mr Mitchell said.
