Australian Dexus (ASX:DXS) and the Healthcare Wholesale Property Fund (HWPF), which Dexus manages, have exchanged contracts to acquire the Australian Bragg Centre in Adelaide from Commercial & General.
The property was acquired for a development completion price of A$446.2m, making the transaction one of the largest single-asset private healthcare acquisitions in Australia. Post-acquisition the Centre will be co-owned 50/50 between Dexus and the HWPF.
The Australian Bragg Centre building is a state-of-the-art clinical and research facility within Adelaide’s A$3.6b BioMed City precinct. The Centre incorporates world-class facilities for cutting edge research by the South Australian Health and Medical Research Institute (SAHMRI) and offers lab and office space for South Australia-based health and biomedical companies.
The building will house Australia’s first proton therapy unit specialising in next generation cancer treatments. The proton therapy unit is supported by Federal and State Government funding and will sit in a purpose-built bunker, overseen by clinical and research experts from SAHMRI.
The building, which is currently under development, is 77% pre-leased to customers either backed or supported by the South Australian Government, with a weighted average lease expiry of 21.9 years from completion in August 2023. The acquisition terms include a two-year rental guarantee provided by Commercial & General over the remaining space to be leased.
On completion, the Australian Bragg Centre will increase Dexus’s group healthcare exposure to over A$1bn and grow HWPF’s portfolio to A$900m. Dexus’s total portfolio includes a range of office, industrial and retail assets, plus a division focused on rentable space for meetings and events. As of 30 June 2020 the total portfolio stood at A$32bn.
Commenting on the acquisition, Dexus CEO, Darren Steinberg said, “This transaction accelerates the growth of our funds management platform and is a step towards our goal of being a partner of choice in Australian healthcare property. It also increases Dexus’s portfolio diversification, providing exposure to a sector with strong tailwinds.”
Dexus Executive General Manager, Funds Management, Deborah Coakley added, “This is an exciting milestone for HWPF that secures a landmark, large-scale healthcare asset, diversifying the fund’s portfolio of high-quality healthcare properties.”
Commercial & General CEO, Trevor Cooke commented, “This is a vote of confidence by the institutional market in the South Australian economy and the quality opportunities we continue to create. The Australian Bragg Centre is a transformational project that builds on our long-standing relationship with Dexus.”
The transaction is expected to be completed on 30 October 2020.