SAHMRI 2 sold in biggest real estate deal since pandemic hit

In the biggest SA property deal since before the pandemic, the SAHMRI 2 building has been sold to new joint owners ahead of its completion some years away.

SAHMRI 2 has been sold for $446.2m in the biggest real estate deal since the pandemic hit and in what the new owners call one of the largest single-asset private healthcare acquisitions ever in Australia.

Developers Commercial & General agreed to sell the Australian Bragg Centre — also known as SAHMRI 2 — to health investors Dexus and the Healthcare Wholesale Property Fund as joint owners.

The building in the $3.6 billion BioMed City precinct will house Australia’s first proton therapy unit able to pulverise inoperable cancers without damaging surrounding tissues.

It will also be home to research facilities for the South Australian Health and Medical Research Institute (SAHMRI) and have lab and office space for SA Health and biomedical companies.

The deal does not change any of these arrangements and is based on a “development completion” price.

The SAHMRI 2 building has been sold for $446 million.

When construction by builders LendLease commenced in June the project value was put at $500m, up from $330m in previous estimates, and it was estimated it would generate $1 billion in economic activity during construction.

The 12-storey building, now due for completion in August 2023 after delays, is 77 per cent pre-leased to customers either backed or supported by the state government, according to a statement to the Australian Stock Exchange by the new owners.

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 more than $1 billion and grow HWPF’s portfolio to $900 million.

Dexus chief executive, 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.”

Commercial & General chief executive, Trevor Cooke said: “This is a vote of confidence by the institutional market in the South Australian economy and the quality opportunities we continue to create.

He noted C&G has added nearly $1bn in privately owned health infrastructure in SA including the Calvary Adelaide Hospital and is looking for further local investment opportunities in addition to its existing pipeline of works.