Healthscope bidders court listed trust to manage assets

Speculation is mounting that a real estate group will join the BGH Capital-led consortium bidding for Healthscope to control the company’s $1.2 billion-plus real estate portfolio.

Sources suggest that Australian Unity and the New Zealand-based Vital Healthcare Property Trust have been approached to manage the portfolio of about 32 hospital assets that are owned by the country’s second-largest hospital operator.

Both parties declined to comment.

It is understood that AustralianSuper, the Canada Pension Plan Investment Board, Ontario Teachers and the interests of Singapore sovereign wealth fund GIC are all involved in the $4.1bn takeover bid led by BGH Capital with a view to gain ownership of Healthscope’s property portfolio.

It remains attractive to superannuation funds given the 20-year leases that would be offered for the assets, annual rental increases pegged to the inflation rate and potentially a capitalisation rate of about 7 per cent. But the superannuation funds would need a party to manage the assets, which is why one of the Australian listed property trusts is no doubt being courted, likely by the bidding consortium’s adviser, Macquarie Capital.

Australian Unity has the Healthcare Property Trust, which owns hospitals, medical clinics, nursing homes, day surgeries and other medical-related assets. The Vital Healthcare Property Trust is listed in New Zealand and invests in health and medical-related on both sides of the Tasman.

WEB Business Dataroom Healthscope graphs

Other Australian real estate groups, including Dexus Property Group, Charter Hall and Lendlease, are also not far from the action after they looked at the property portfolio in 2014.

That was when TPG and Carlyle considered whether to sell off the properties separately before instead opting to sell the entire business in one line.

Back then the private equity owners, through adviser UBS, looked at selling off the properties as two parcels as well as in one line.

Others have in the past year apparently weighed a takeover bid for the UBS-advised Healthscope including Asian hospital operators.

The question is whether other parties will now come forward and make rival bids. Some observers say any offer would be knocked back because the chief executive is relatively new in the job and, with the shares trading at prices below the 2014 $2.10 IPO price, the board would view any takeover attempt as opportunistic.

However, the challenge for any rival offer from another parties like IHH out of Asia, the US-based HCA or even Wesfarmers, (all rumoured as possible suitors in the past) is that the largest shareholder, 15 per cent stake holder AustralianSuper, has said it would not support a rival bid.

Whether the bid for Healthscope receives backing from the board remains to be seen, with some suggesting the 16 per cent premium — about 24 per cent before DataRoom revealed BGH Capital was circling the business just over a week ago — was high enough.

Also on the minds of some is the question of who will run Healthscope for the private equity funds. Former boss Robert Cooke is understood to have ruled himself out. Former Ramsay Healthcare executive Jill Watts has been close to the action for BGH Capital and is not to be ruled out.