Fully leased medical centre in WA sells for $11.8 million following a competitive sales campaign

24 May 2023

JLL has announced that Cottesloe Medical Centre, a purpose built medical and allied health facility, has sold for $11.8 million, following a highly competitive sales campaign.

The sale of Cottesloe Medical Centre is the first medical and allied health centre transaction in Western Australia this year and is a sign of Perth’s growing need for high-calibre medical facilities.

JLL’s Nigel Freshwater, Senior Director, Capital Markets (WA) and Simon Quinn, Director, Alternative Investments (Australia) sold 525 Stirling Highway, Cottesloe via an Expressions-Of- Interest campaign, achieving a yield of approximately 5.71% and a building rate of $6,849 per square metre of NLA. Brian Neo from LJ Hooker Commercial acted as advisor on behalf of the purchaser.

525 Stirling Highway, Cottesloe was sold on behalf of Westbridge Funds Management.

The fund manager initially acquired the asset for $4.85 million in September 2004 as part of a single- asset syndicate for their investors.

The sales campaign attracted interest from a large number of buyers looking for a passive investment and seeking a diverse and secure income stream. Eight formal offers were received by JLL as a result of the 110 enquiries, with local WA private investors and institutional buyers ultimately dominating the bidder spread.

Mr Freshwater said, “Medical and allied health is one of the most tightly held sectors of the WA market and opportunities to acquire such high-quality medical centre assets across Perth, let alone in premium sought-after locations such as Cottesloe, are very seldomly presented to buyers. Hence the market response to Cottesloe Medical Centre was appropriately aggressive in terms of both engagement and pricing.”

Head of Commercial Funds at Westbridge Funds Management, Alex Lambert, added, “Throughout the course of holding this asset, we implemented a number of proactive improvements to drive value growth, including rejuvenating the tenancy mix with new ground-floor tenancies, improving fitouts and resetting leases to offer an attractive WALE for future buyers.

“Combined with the overall growth of the medical sector, we felt the time was right to sell the asset and wind down this Fund to capitalise on strong fundamentals for our investors,” said Mr Lambert.

The sale marked a total return of 540% to Westbridge investors (net of initial equity invested), equating to an average annual total return on investment of 29% per annum.

Cottesloe Medical Centre provides 1,722sqm of high-quality healthcare accommodation over a two- storey, purpose-built facility. Situated approximately 10km from the Perth CBD, the centre boasts a high-profile location on the corner of Stirling Highway and Forrest Street and is adjacent to the iconic Napolean Street retail precinct within the affluent suburb of Cottesloe.

Mr Quinn said, “Australia’s healthcare property market has received a lot of investor interest during the last ten years. Strong market fundamentals supported by demand correlated with favourable macro- demographic impacts are the source of the attraction.

“The anchor tenant of Cottesloe Medical Centre, IPN Medical Centres, has a proven track record and presence across Australia with over 160 centres nationally. The inclusion of a new 7-year lease and anchor over 67% of the total building NLA gave investors a great deal of confidence in an asset class which already is viewed by many as secure and recession proof,” added Mr Quinn.