SAHMRI cancer bunker twist as multi-million dollar lawsuit erupts with Dexus over Adelaide’s most expensive building

Adelaide’s most expensive building is involved a new legal headache as more cashed-up stakeholders enter the fray.

The state’s embattled medical research institute and Australia’s biggest office landlord are embroiled in a multi-million dollar legal stoush over Adelaide’s most expensive building.

Developers Commercial & General sold the Australian Bragg Centre for Proton Therapy, formerly SAHMRI 2, to Dexus Healthcare Property Fund for almost $500m in October 2020.

But in another twist to a cancer bunker controversy, Dexus is suing the South Australian Health and Medical Research Institute, alleging failings including breach of contract of annual leases worth $17m.

Dexus Healthcare, which manages a $1.6bn fund for superannuation, public entities and other SA investors, launched a Supreme Court lawsuit five months after SAHMRI’s world leading proton therapy unit collapsed when the state government sacked its US supplier, ProTom International.

Australian Bragg Centre in Adelaide. Picture: Matt Loxton

Dexus bought the building for almost $500m in 2020. Picture: Matt Loxton

Taxpayers had already paid out more than $52m.

The institute, which was due to open the southern hemisphere’s first such unit in a fortified, four-storey concrete bunker last year, has not filed a defence.

Court documents allege the institute, located in the West End’s $3.6 billion BioMed precinct, repeatedly “refused” to execute 30-year office leases.

This would be worth at least $510m.

The property giant wants the state’s top judge to force the institute, its subsidiary centre and lawyers, to “duly and properly execute” the three leases or for the Registrar General to act.

“ABC has refused … failed to execute and deliver the executed PTU lease in breach of … the project deed without any justification for so doing,” its claim alleges.

Dexus Healthcare, of which its parent company is a publicly-listed property investment fund with a $53bn portfolio, accuses SAHMRI - ABC’s parent organisation - of similar allegations.

The proposed Australian Bragg Centre proton therapy unit spearheaded by the South Australian Health and Medical Research Institute. Picture: supplied by SAHMRI.

Its statement of claim filed with the court, reveals the project’s secret details.

The Weatherill Labor government “committed to help build” SAHMRI 2 in 2017 and signed an office tower agreement for a 99-year lease term with C & G Health No 2 for the land.

The papers assert C & G paid $2.6m “rent”, excluding GST, to lease the land before constructing the 14-storey centre.

The 22,000 sqm tower would house “dry lab” commercial tenancy including SAHMRI staff on three floors and purpose-built areas including the concrete bunker.

Dexus billed the $446.2m sale in October 2020, with Healthcare Wholesale Property Fund, as one of Australia’s biggest such acquisitions.

The documents outline efforts since September 2023 for SAHMRI to occupy floors four, five and six but Dexus alleges negotiations since August last year failed to resolve the dispute.

SA Health leases three floors in an otherwise empty building.

Outside court, a Dexus spokesman said its purchase was based on SAHMRI leasing the facility for proton therapy and research.

“Dexus regrets that it has been unable to reach a resolution,” he said.

“(It) remains committed to resolving this issue and establishing a PTU to treat South Australian and Australian cancer patients.”

A SAHMRI spokesman said its lawyers were working through Dexus’ claim.

“If a response is needed, it will be presented to the court when required,” he said.

Chief Justice Chris Kourakis last week adjourned the case for further negotiations.

Originally published as SAHMRI cancer bunker twist as multi-million dollar lawsuit erupts with Dexus over Adelaide’s most expensive building