NorthWest Healthcare offers $2.6B for Australian Unity Healthcare

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Canadian listed NorthWest Healthcare is now offering to pay $2.6 billion to take over Australian Unity Healthcare Property Trust (AUHPT), which has assets worth $2.3 billion.

It is the third offer made by the Toronto-based business.

Backed by Singapore’s sovereign wealth fund GIC, NorthWest Healthcare has called for a unitholder meeting to vote on the bid for the trust, with AUHPT stating it will not be rushed into a decision. The proposed sale has important ramifications for the 10,000 plus investors who rely on AUHPT’s dividends for their retirement earnings.

If the vote backs NorthWest Healthcare’s offer, it will make NorthWest Healthcare the biggest single owner and manager of healthcare real estate, including age care facilities, in Australia. It paid $500 million for Generation Healthcare REIT after becoming its largest shareholder in 2017.

Toronto-based NorthWest Healthcare, which has interests in 186 properties in Canada, Brazil, Europe, Australia and New Zealand, also announced it has acquired a 5.1% stake in AUHPT, with options for an additional 11.1%, which NorthWest Healthcare claims makes it AUHPT’s biggest unitholder.

Australian Unity Funds Management Limited (AUFM), as responsible entity of AUHPT, announced on 25 May that it had received a further revised unsolicited proposal from NorthWest Healthcare Australia and NorthWest Healthcare Properties Real Estate Investment Trust (NorthWest) to acquire 100% of the units in AUHPT at a revised price of $2.55 per wholesale unit.

NorthWest said its new bid for Australian Unity Healthcare includes a capital partner and is an all-cash offer for all shares it does not currently own. NorthWest made its previous unit acquisitions as part of an arrangement with Hume Partners Pty Ltd. The current offer quotes prices of $2.38 per wholesale unit, $2.44 per retail unit and $1.51 per class-A unit.

AUHPT owns 62 hospitals, medical office buildings, residential aged care centres such as Constitution Hill Aged Care (pictured) in Northmead, 26km west of the Sydney CBD, and other healthcare facilities. The portfolio is 98% occupied with a weighted average lease expiry of 16 years, according to NorthWest. Forecast annual rent growth is approximately 2.5% and AUHPT has a development pipeline of at least $467 million.

The offer, which requires 75% AUHPT unitholder approval in a vote on 1 July, implies a total equity value of $1.96 billion and an enterprise value of $2.43 billion, including debt of $577 million. The offer represents an approximate 30% premium and 16% premium to AUHPT’s unaffected unit price as of 17 February and its current unit price, respectively.

Established in 1840, Australian Unity was Australia’s first member-owned well-being company, offering members and customers health, wealth and care services. It has grown into an aged care provider, operator of retirement communities, disability services, home care services and dental clinics, together with insurance, banking, investment and health insurance.