Dexus pauses redemptions on $1.5bn healthcare fund

The Australian Bragg Centre in Adelaide. Picture: Matt Loxton

Dexus Group is fighting another fire, with the group pausing redemption payments on its healthcare property fund.

The Dexus Healthcare Property Fund provides institutional investors access to an open-end vehicle with Australian healthcare properties that are set for long-term growth. It has 11 assets worth $1.5bn and targets annual returns of 7.5 per cent.

However, it is understood a dispute over a South Australian property, Australian Bragg Centre, has prompted the fund to pause redemption payments, despite investors still being able to claim them.

The building at 2 North Terrace in Adelaide houses a government unit researching proton therapy, a precise, non-invasive radiotherapy that can destroy cancer cells while minimising damage to surrounding healthy tissue, including vital organs.

The tenant is the SA Health and Medical Research Institute.

Installation of the proton therapy unit has been delayed, which was understood to be linked to issues with a supplier.

Dexus has paused the redemptions amid the delays due to challenges valuing the unit price while the situation is unfolding and with a view that making payments now would not be equitable to investors.

The fund has also taken SAHMRI to court over a lease issue, which is not related to the pause in redemptions. While other funds have similar constitutions to allow for redemption freezes, the situation is not playing out at an ideal time for Dexus.

The real estate and infrastructure manager remains in legal dispute with large institutional investors in Melbourne and Launceston Airports, including IFM and the Future Fund. The funds have made efforts to force Dexus into selling its 27.3 per cent stake in the airports company.

The Australian reported last month that a NSW Supreme Court case on the matter has been pushed back from early August to between November 10 and 21, with mediation set for November 3.

Dexus said on Tuesday it would stand behind shareholders it represented in the airport company’s ownership structure as they took their own legal action to ensure that they were not swept up in the dispute and forced to offload their holdings.

The push to get Dexus to sell out of APAC, the company which owns both airports, is being driven by funds manager IFM. The two airports are worth about $14bn.

The dispute was sparked when Dexus last year sought to sell off a 9.7 per cent stake in the airport company, opening up a data room.

It invited 18 funds and its co-investors now want out all together.

They allege Dexus breached confidentiality terms as it tried to sell part of this interest. Dexus-managed funds own an interest in APAC worth about $4bn.

Dexus controls $53.4bn of real estate and infrastructure and moved into the infrastructure management arena after acquiring the management rights of AMP Capital.