Growthpoint Properties has launched South Africa’s first unlisted healthcare real estate investment trust (Reit), Growthpoint Healthcare Property Holdings, which already holds five assets valued at R2.4-billion.
The introduction of Growthpoint Healthcare has received strong market interest with its first close attracting capital commitments of R285-million from third parties. It is expected to raise at least double that over the next year.
The new property holding vehicle invests exclusively in healthcare assets in South Africa occupied by licensed operators of hospitals, clinics, pharmacies and laboratories. Its focused investment mandate differentiates it in the market.
Its portfolio has a weighted average lease length of about nine years, reflecting the defensive nature of investing in healthcare real estate.
Two of its healthcare properties are operated by private healthcare provider Busamed, and one each by JSE-listed healthcare players MediClinic and Netcare. In addition, Netcare also rents 50% of the space in N1 City Medical Chambers, the medical suites adjacent to the N1 City Hospital.
Growthpoint Healthcare has a further R750-million pipeline of hospital developments, which will benefit from Growthpoint’s well-established property development expertise.
The Reit will break ground on the first development – a new R450-million specialist hospital – this month.
It is also in advanced discussions regarding the development of another R300-milllion specialised facility.
The Reit also has several acquisition and development opportunities on the horizon, which are being evaluated.
Growthpoint Management Services provided R2.1-billion to acquire Growthpoint Healthcare’s starting portfolio, a portion of which has been converted into equity, leaving Growthpoint as the anchor investor with an equity investment of R650-million on the first close date.
The remainder is a R1.4-billion loan to Growthpoint Healthcare, which will be settled over time as the company raises further capital.
Growthpoint corporate finance head George Muchanya confirmed that Growthpoint will remain a key strategic investor in Growthpoint Healthcare.
“Growthpoint Healthcare is playing a leading role in promoting the growth of the healthcare sector by providing the capital that emerging operators and other new entrants to the sector require to establish themselves.
“It is often estimated that up to 70% of the capital required to start a new healthcare facility is spent on the property. Growthpoint Healthcare takes this burden off the operators and this will certainly help more projects to come on stream,” he said.
He added that the launch coincides with a phase where many of the incumbent players in the healthcare sector, particularly newer or smaller operators, are seeking to grow. This is expected to provide deal flow for the specialised investment vehicle.
Further, Muchanya noted that investors, particularly pension funds, have shown an initial interest in the investment opportunity as it provides them with the ability to match their long-term liabilities with long-dated assets.
“We’re pleased that Growthpoint’s fund management strategy is making real progress and successfully attracting third-party capital. We look forward to the positive contributions . . . that this will introduce for Growthpoint’s investors, as well as the additional new possibilities it represents for our property incomes streams,” Growthpoint Group CEO Norbert Sasse commented.
Growthpoint Management Services aims to increase Growthpoint Healthcare’s scale for investors and eventually grow it towards holding R10-billion in assets and a stock exchange listing.