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Fund manager Charter Hall Group (ASX: CHC) has acquired Sonic Healthcare's (ASX: SHL) Sullivan Nicolaides Pathology life science facility in Brisbane's Bowen Hills for $445 million in a 20-year triple-net sale-and-leaseback transaction.
The deal, which settled yesterday, covers the 43,500-square-metre national reference centre at 24 Markwell Street, described as the main laboratory for Sonic's Sullivan Nicolaides Pathology operation, the pathology market leader in Queensland and Northern NSW.
Initial net rent is $25 million per annum with inflation-indexed rental increases built into the lease structure, pitching the deal at an initial passing yield of 5.62 per cent..
Charter Hall Social Infrastructure REIT (ASX: CQE) is investing $53 million in equity for a 25 per cent stake in a new institutional partnership established to hold the asset.
The remaining equity will be held by other Charter Hall managed funds.
Charter Hall's CEO David Harrison says the transaction aligns with the group's strategy of securing long-WALE assets underpinned by essential services and investment-grade tenants.
“With more than $12 billion of sale and leaseback, long WALE assets secured over many years, we see this new Sonic Healthcare relationship expanding our investment grade corporate relationships with excellent long term secure cash flows for our investor customers," says Harrison.
“We continue to see compelling opportunities in long WALE assets and believe these attractive yielding non-residential investments providing a compelling investment proposition through multiple cycles.”
Melbourne-based Sonic Healthcare, one of the world's largest medical diagnostics companies, flagged the sale during its half-year results in February this year, estimating proceeds of between $450 million and $500 million for its Brisbane hub laboratory sale-and-leaseback with completion targeted by June 2026.
The $445 million settlement sits at the lower end of that range.
Sonic Healthcare CFO Chris Wilks says the deal is consistent with the company's broader capital management approach.
“This transaction is consistent with Sonic’s capital management strategy and focus on return on invested capital, releasing capital that can be deployed at higher returns, and crystallising increased value that was not reflected in Sonic’s financial statements," says Wilks.
"We welcome this long-term relationship with Charter Hall.”
The facility serves as a specialised national reference centre for pathology testing and is a critical piece of infrastructure for Sonic's Queensland and Northern NSW operations.
Sullivan Nicolaides Pathology operates an extensive network of collection centres across both regions feeding into the Bowen Hills hub.
For Charter Hall, the deal deepens the group's exposure to the life sciences and healthcare property sector, a segment attracting increasing institutional capital as investors seek long-dated income streams backed by essential-service tenants.
The triple-net lease structure means the tenant bears the cost of outgoings, maintenance and insurance, providing a clean income stream to the partnership.
CBRE's Bruce Baker acted as agent for the vendor.
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