Healthscope's $1 billion-plus property portfolio will be offered to buyers in two separate parcels of similar value, with major pension funds likely to circle the private hospitals, according to market sources.
The portfolios are expected to attract buyers looking for safe investments with stable long-term leases. Healthscope’s private equity owners, Carlyle and TPG Capital, which are being advised on the portfolio by UBS, could reap $1.25bn from the sale, sources said. However, analysts believe some smaller Australian groups that would be unable to swallow the entire hospital portfolio, suggesting such a price tag was overly optimistic.
On offer, according to sources, are 28 of Healthscope’s 44 properties, with 20-year leases and annual rental increases pegged to the inflation rate.
Bidders can purchase either one or both of the portfolios of 14 properties, worth about $600 million each.
Two of the most valuable in the portfolio are thought to be Nepean Private Hospital in Penrith, NSW, and Sydney Southwest Private Hospital. Some question whether the portfolio’s
returns would be high enough to attract one of the dominant global private equity groups like Blackstone, which has previously flagged interest in real estate assets linked to healthcare, saying the portfolio would be more suited to superannuation funds.
A sale of Healthscope’s real estate portfolio is being considered as advisers weigh up overall options for the $5bn hospital provider.
Sources said a float on the Australian Securities Exchange was the most likely path, with the property assets possibly sold separately.
A trade sale was a secondary option.
Healthscope’s operating business, being dubbed “op-co”, could also appeal to a private equity buyer, while the property business, “pro-co”, could be offloaded to both pension funds or other retirement property owners like the locally listed Generation Healthcare REIT.
It is understood that smaller listed real estate groups such as Folkestone and Morgan Stanley’s Arena Investment Management could be interested in some of the properties, depending on price.
UBS is advising on the real estate options for Healthscope, and also on the overall options for the business with Macquarie Group.
Merrill Lynch, Goldman Sachs and Credit Suisse have been appointed as co-lead managers.
Carlyle and TPG declined to comment yesterday.