Ramsay Health Care to offload a number of hospitals to real estate landlords

Male nurse pushing stretcher gurney bed in hospital corridor with doctors & senior female patient

Ramsay Health Care is believed to be planning a move to sell a selection of its hospitals to real estate landlords after suitor Kohlberg Kravis Roberts abandoned a $20bn buyout proposal earlier this year.

Sources say that investment bank UBS is undertaking preparatory work for Ramsay for a sale and lease back of its real estate assets, with a process likely to be launched next year.

The country’s largest private hospital operator has previously ruled out a sale of all of its $4.5bn-plus real estate portfolio, due to financial disadvantages from a tax perspective.

However, DataRoom understands that the company has signalled some assets can be offloaded without any big capital gains tax payments that would make the move counter-productive.

Ramsay has indicated that there may be some parcels of assets that make sense – accounting for about 25 per cent of its overall portfolio.

It is understood that the hospital operator is actively engaged with potential buyers. Charter Hall and AustralianSuper have previously shown interest, among others.

In Australia, Ramsay has 72 hospitals and day surgery units.

In addition to its private hospitals, Ramsay Health Care also operates four public facilities, including the Joondalup Health Campus in Western Australia that acts as a teaching hospital, and other campus sites, Noosa Hospital and Peel Health Campus.

Ramsay Health Care also has a community pharmacy brand which operates more than 35 in-house pharmacy departments and dispensaries, as well as a retail franchise operation supporting 55 community franchise pharmacies.

Previously, there have been suggestions that Wesfarmers may be an interested buyer of that business.

Wesfarmers purchased Priceline owner Australian Pharmaceutical Industries in 2022 for $774m.

The move to offload hospital sites comes as one of the landlords of rival Healthscope also places assets up for sale.

Medical Properties Trust has hired Goldman Sachs to sell about a dozen Healthscope hospitals it purchased from private equity firm Brookfield in 2019 for $1.2bn.

Groups such as Dexus Property Group, Australian Unity and HomeCo are thought to be among the interested buyers.

Meanwhile, some believe that Ramsay remains open to a sale of its European business, Ramsay Sante, which Fresenius Helios recently ran the ruler over.

Ramsay owns 52 per cent of Ramsay Sante.

Sources say Ramsay’s motivation for selling real estate assets is to offer support at a time that healthcare providers are struggling with higher costs, particularly linked to hiring staff, and to see a lift in its share price.

After initially offering $88 per share for Ramsay, the private equity firm last month said it was not in a position to improve a less attractive, revised proposal that Ramsay rejected.

Goldman Sachs and UBS are working as defence advisers for Ramsay, while KKR had been advised by Barrenjoey and Credit Suisse.

Ramsay’s largest shareholder, The Paul Ramsay Foundation which owns 19 per cent, has been working with Adara Partners.

Ramsay shares on Wednesday closed down 47c to $56.69.