AFR 9 April 2017

Healthy pricing for Evolution hospital portfolio

Nick Lenaghan, April 9 2017

The $180 million Evolution Healthcare hospital portfolio has prompted some of the strongest bids for medical property offered recently as the sale process enters its final stage. Preferred buyers for the portfolio have now been tapped, according to industry sources, and the frontrunners are thought to be Sydney manager Barwon Investment Partners and New Zealand’s Vital Healthcare.

As expected, the portfolio is being split into its Australia and New Zealand components as bids are finalised. The larger part of the portfolio, by value, lies in New Zealand. Bidding on the local assets has reached a 5.5 per cent cap rate, while the New Zealand property is likely to change hands at 5.75 per cent. Listed in New Zealand, Vital is already familiar with that market and in a strong position to conduct due diligence on the assets there. Vital’s $1 billion portfolio is heavily weighted towards Australia currently. Increased skew Last week that skew increased as Vital invested another $27.6 million locally, including the purchase of an aged-care facility at Grafton South in NSW. Boutique fund manager Barwon Investment Partners, thought to be in due diligence on Evolution’s Australian hospitals, launched a $500 million healthcare property fund for wholesale investors late last year. The equity cap on the fund is about $325 million.

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