NorthWest presses for Australian Unity fund
Canada’s NorthWest Healthcare Properties has stepped up the pressure in its $2.3 billion bid to take over an Australian Unity-run fund by requesting the unitholders register, a move that lays the groundwork for a potentially decisive vote on the property trust’s future by its own investors.
Partnered by Singapore’s GIC, the ambitious and acquisitive NorthWest has been at loggerheads with the manager of the Australian Unity Healthcare Property Trust after lobbing a $2.20 per unit bid two weeks ago and establishing control over a 16.2 per cent stake.
That stake – established though a put-and-call arrangement with one of the fund’s largest shareholders, Hume Partners – has allowed the Canadian team to request the register. It also gives the Canadians a beachhead from which it can call a unitholders meeting that could vote on changing the property’s trust manager and or endorse NorthWest’s takeover offer.
On Friday, the fund’s Australian Unity-run manager broke cover, issuing a firmly worded dismissal of the Canadian offer in a letter to unitholders.
The fund manager told its investors it was not in their best interests for Australian Unity to engage in any further discussion with NorthWest because the offer undervalued the healthcare property trust. Worse, the Canadian offer could “erode value for existing unitholders by impacting our relationships with existing and potential counterparties,” it warned.
“AUHPT [Australian Unity Healthcare Property Trust] has provided you, and your fellow investors, with consistent and stable returns over many years and is well placed to continue to provide these outcomes long into the future,” the investor letter said.
The Canadian offer represents $2.20 per unit, a healthy 10 per cent premium to the $1.98 price the fund units had on February 17 when the bid arrived, Since then units in the fund have risen to $2.10. The fund’s assets, including properties such as Robina Private Hospital in Queensland, are worth over $2.45 billion, according to Australian Unity.
Backed by the Singaporean sovereign fund, the deep-pocketed Canadian investment house appears ready for a serious tussle. In one respect, its opening move reprises a similar gambit it took as part of its ultimately successful takeover of the since delisted $500 million Generation Healthcare REIT.
In 2016, more than a year before the Canadians finally mopped up outstanding shares and completed the buyout of Generation, it established a position on the REIT’s register through a put-and call arrangement with Hume, the same investment house that has given it an entry into the Australian Unity-run fund.
A key difference this time is that the Canadians have put up a whole of fund offer upfront.
Over the past five years, the Canadians’ interest in Australian healthcare real estate has only intensified. Once niche, the sector now has strong appeal for major fund managers, including locally, Dexus, Barwon Investment Partners and Centuria Capital.
Last December, NorthWest’s local head, Craig Mitchell, outlined ambitious growth plans, backed by GIC, with at least $1.5 billion of firepower at the ready. The partnership with GIC has already proven itself willing, absorbing half of Healthscope’s $2.5 billion hospitals portfolio two years ago.
