HomeCo and PDG Group form Alliance to Deliver Large-Scale Health and Wellness Precincts
13 August 2021
Home Consortium and PDG Corporation have entered into a Memorandum of Understanding to collaborate on developing strategic healthcare and wellness precincts initially focused on Victorian opportunities and over time expanding into other Australian markets.
The strategic partnership which will seek to develop world class precinct opportunities across the healthcare space, brings together the complementary skills and capability of two vibrant and innovative teams. The partnership will combine the financial, structuring and balance sheet strength of HomeCo with the PDG Corporationās world class design, development and delivery capability.
PDG is a privately owned, Melbourne based integrated property group with 36 years of continuous management and ownership. Over this time, PDG has brought to life a range of commercial, residential, office, retail and mixed-use developments with a focus on delivering excellence for its partners, clients and communities.
This announcement builds on HomeCoās recent announcement dated 2 August 2021 in relation to the establishment of ASX-listed HealthCo Healthcare and Wellness REIT following a successful IPO roadshow which resulted in the IPO being upsized to $650 million (from $600 million).
HealthCo will be Australiaās only ASX-listed diversified healthcare REIT and will have significant immediate financial capacity via a $400 million fully undrawn committed debt facility. The strategic alliance between HealthCo and PDG, aims to tap into the opportunity rich healthcare sub-sectors being targeted by HealthCo across childcare, aged care, primary medical, hospitals and life sciences. L.E.K.
Consulting conducted an extensive study into the health care property sector in Australia for HealthCo earlier this year. The study identified at least $87bn of new investment is required for asset development across the five health and wellness sectors that comprise the diversified HealthCo model portfolio. This includes 72 emerging or planned Health Research and Innovation precincts around Australia of which 20 are in Victoria.
PDG Corporationās Managing Director and Founder Vince Giuliano says that the relationship with HomeCo is another milestone for PDG as the company continues to leverage its end-to-end capability across all aspects of property in Victoria and beyond.
āBuilding on our 36-year track record of exceeding the expectations of our development partners and property clients, we are excited to be working with HomeCo towards establishing a new pipeline of opportunities in the urban, health and wellness space for HealthCo. PDGās growing portfolio of achievements across the healthcare and life sciences sector, which includes projects such as global biotech CSLās future integrated laboratory and headquarters at Melbourneās foremost biomedical precinct in Parkville and the Queen Victoria Market development (in partnership with the City of Melbourne), position us well to complement HealthCoās mandateā.
HomeCoās Managing Director and CEO David Di Pilla said, āHomeCo looks forward to the collaboration with PDG which enhances HomeCoās pipeline of new opportunities. The establishment of a formal MoU between the parties was a natural extension of a number of joint projects we are exploring and we are well advanced on several opportunitiesā.
āWe believe the combination of PDGās integrated delivery capability and HomeCoās expertise in ownership, development and strategic investment will be a compelling proposition. We anticipate being able to jointly develop world class precincts that we hope will become a part of Victoria and Australiaās healthcare landscape for the futureā.
Opinion
This is an unusual move for HomeCo, however access to off market opportunities to develop assets is becoming harder as markets are thoroughly picked over.
I would expect that there is little in the way of binding obligations on either party entering into the MOU, but is likely to enable HomeCo to lean on the inhouse expertise of PDG to find investigate and compile a feasibility for the delivery of assets to suite HomeCo’s funds, and perhaps a form of fixed commercial arrangements that would then facilitate its delivery.
In a tight market, and when your internal resources are stretched or without the required capabilities, it is reasonable to partner with others who can fill the gaps, however partnership arrangements don’t spread the risk and HomeCo will still need to ensure the usual risks are well mitigated, otherwise the partnership will fail.
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