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Home Consortium (ASX:HMC) is fomenting its seed portfolio of healthcare properties ahead of a late-2021 launch of a new ASX-listed fund 'HealthCo', announcing $133.2 million of spending on high quality primary medical and childcare assets.
The bulk of the funds are for a $110 million acquisition of Health Hub Morayfield in Queensland's Moreton Bay area, with the remainder going towards childcare centres in Brisbane and Sydney.
After the deals are completed they will lift HealthCo's seed value to $480 million, while an additional $300 million worth of additional assets are currently under due diligence.
HomeCo is aiming to establish HealthCo in the first half of FY22 and is targeting an initial equity raise of $1 billion.
Today's announcements contemplate put and call option for Health Hub Morayfield - a property that includes a diverse range of primary medical services such as a GP clinic, pharmacy, radiology and other allied health services, in addition to child care services.
HomeCo has completed the $13 million acquisition of a childcare centre leased to Busy Bees in the Brisbane suburb of Woolloongabba, and recently exchanged contracts for a $10.2 million childcare centre in the inner western Sydney suburb of Five Dock which is currently leased to G8 Education (ASX: GEM) subsidiary Greenwood.
"We remain on track to establish HealthCo later this year and today's update further demonstrates our ability to source high quality assets which are well suited to the model portfolio strategy we announced last month for HealthCo," says HomeCo managing director and chief executive officer David Di Pilla.
"Pleasingly, we continue to execute our strategy in a capital efficient manner through active capital recycling.
"Our balance sheet is well capitalised with minimal debt, providing us with significant capacity to secure additional assets for HealthCo including several which are currently under due diligence."
The latest acquisitions coincide with a winding down of HMC's exposure to large format retail (LFR), having previously offloaded $266.4 million in LFR assets to the affiliated HomeCo Daily Needs REIT (ASX: HDN) listed in November last year.
The company also announced today it exchanged contracts to sell an LFR property in Morayfield with expected gross proceeds of $28.4 million, following a recent LFR property sale in Bathurst, NSW which realised gross proceeds of $17 million.
Once all these transactions are complete, HMC's directly owned portfolio of LFR assets will decrease to $154.6 million, although it will continue to actively manage its remaining LFR assets held on balance sheet.
HomeCo has reaffirmed funds from operations (FFO) guidance of no less than $35 million, and has recently engaged L.E.K. Consulting Australia Pty Ltd to undertake a detailed industry report analysing the five key sub sectors in which HealthCo is targeting investment.
The report which is in the process of being finalised indicates a potential addressable market of around $220 billion of healthcare real estate in Australia.
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