Dexus ties up Australian Unity Healthcare

9 June 2021

Dexus announced today that it has established a new healthcare platform relationship with Australian Unity over the Australian Unity Healthcare Property Trust (“AUHPT”) with a $180m investment in the Trust’s $320m capital raising.

Dexus is paying a 16% premium to the current net asset value of the fund for a 7% interest in the Fund but importantly, Dexus has also secured a first right over the Australian Unity management platform for AUHPT in circumstances in which Australian Unity decides to sell an interest in the platform. The Dexus and Australian Unity agreements up the ante on NorthWest’s ambitions to take control of the trust. Having been rebuffed 3 times by the AUHPT Board, NorthWest may now find their ambition far more difficult to achieve.

Northwest’s latest proposal full cash take over bid was priced at $2.55 per wholesale unit. Northwest called for a unit holding meeting on the 1st July 2021 to consider the proposal. The proposal was rejected as feedback from AUHPT investors was to retain access to the future income and development prospects of the Fund and avoid the tax implications of a potential cash sale.

The Fund’s $320 million capital raising will now provide a liquidity provision for existing investors to either sell up to $20m units at the Dexus buy in price of $2.60 per unit or take up an entitlement offer for additional units. Dexus believes the subscription price of $2.60 per unit represents good value, based on the high-quality nature of the assets and strong investor demand for healthcare real estate.

The agreements also include opportunities for Dexus to invest in certain aspects of Australian Unity’s healthcare development pipeline. In return Dexus have provided AUHPT a first right to acquire a 25% indirect interest in the Australian Bragg Centre (on market-based terms).

Darren Steinberg, Dexus CEO said: “We are confident in the outlook for healthcare real estate and the investment in AUHPT provides us with an efficient way to increase our exposure to this attractive asset class at an appealing price. The broader relationship with Australian Unity provides an opportunity for us to accelerate our growing footprint in healthcare real estate and provides our funds and third party partners with additional investment opportunities.”

Australian Unity is one of Australia’s largest healthcare operators and real estate owners with a significant depth of industry relationships from its 22 years of specialist healthcare real estate investing.

The AUHPT comprises a portfolio of Australian hospital and healthcare properties valued at $2.33 billion and consisting of 67 properties including the recently completed Surgical, Treatment & Rehabilitation Service (STARS) a 182-bed public hospital at Herston in Queensland. AUHPT has a development pipeline of $1 billion of high quality greenfield and brownfield development opportunities, which as a result of this relationship, Dexus will have an opportunity to participate in. The Fund has delivered a strong total return to unitholders of 25.1% over the past 12 months and 14.9% per annum over the past five years

Dexus will continue to separately develop and grow the group’s healthcare exposure through the circa $1.1 billion Dexus Healthcare Property Fund. Today’s announcement represents a new healthcare investment stream and does not impact Dexus’s existing healthcare business which will continue to operate independently of Australian Unity.

The establishment of the Australian Unity healthcare platform relationship and investment in AUHPT is expected to be accretive to Dexus’s FY22 Adjusted Funds From Operations and distribution per security.