12
Mar 2024
HealthCo reports a surge of over 15% in the values of private hospitals within a nine-month period.
Published in News on March 12, 2024
 
                                                            Private hospitals have bucked the trend of declining commercial property values, experiencing a notable increase of over 15% from March to December. This information comes from HealthCo Healthcare & Wellness REIT, the largest listed owner of healthcare property on the ASX.
A portfolio comprising 11 Healthscope-operated properties experienced a substantial net valuation gain of approximately $200 million. HMC Capital, under the management of David Di Pilla, acquired these properties last year for $1.2 billion from a New York-listed property trust.
The Healthscope portfolio received a boost in valuations, coupled with a $100 million capital investment aimed at upgrading and expanding certain assets. As of December 30, the portfolio's valuation reached $1.5 billion.
HCW, identified by its ticker, disclosed these valuation gains while reporting a 29% increase in funds from operations (FFO), a crucial earnings metric for REITs, for the six months ending December—the FFO of $22.6 million, equivalent to 4¢ per share, aligned with guidance. Similarly, the interim distribution of 4¢ per unit, reflecting a 7% year-on-year increase, also met expectations.
The trust reaffirmed its full-year earnings and distribution guidance of 8¢ per unit, marking the first time earnings will cover the fund's payout.
HMC Capital's Chief Operating Officer, Sid Sharma, outlined three key factors contributing to private hospitals' outperformance compared to other mainstream commercial property asset classes. He cited compelling underlying demographics, including an aging population and increased uptake of private health cover, the attractive structure of leases with high-quality tenants, and a scarcity of available high-quality hospitals in the country.
Highlighting the strong demand for healthcare real estate, HMC Capital raised total equity commitments for its unlisted healthcare fund to $650 million in the half-year period. In December, they secured a fourth global institutional investor. The unlisted healthcare fund (UHF) includes seven of the 11 Healthscope hospitals, with HCW owning 49.6% of UHF, valued at $582.3 million.
The remaining four Healthscope hospitals are held on the HCW balance sheet alongside investments in childcare centres and other specialized medical facilities, including seven GenesisCare cancer treatment clinics. Healthscope is HCW's largest tenant, contributing 49% of its rental income, while Healthscope-operated hospitals represent $900 million of its asset base.
With a favourable outlook for the sector, HCW is embarking on a $1 billion-plus development program to expand existing hospital assets and establish new ones, such as The George Private Hospital in Camden, western Sydney.
Projects totalling $200 million are underway, including enhancements to properties like Knox Private Hospital in Melbourne. Additionally, ongoing reviews of $200 million worth of near-term projects and $600 million in longer-term opportunities are underway.
These developments yield attractive returns of up to 7.5%, surpassing HCW's portfolio capitalization rate of 5.16%, which increased by 13 basis points in the past half-year.
While the Healthscope portfolio experienced robust gains, not all of HCW's assets appreciated during the same period, some childcare centres and certain specialist medical facilities incurred minor writedowns due to expanding capitalization rates.
HCW reported a net valuation gain of $38 million (2.5%), with a significant portion attributed to its half share in a $57 million gain at Nepean Private Hospital in Sydney. This contrasts with asset writedowns reported by other REITs like Mirvac and Region Group.
Considering asset sales, part of HCW's ongoing $200 million divestment plan aimed at reducing gearing, values increased by a modest $3 million over the half-year, reaching $1.637 billion.
HCW units experienced a 0.7% decline, falling by 1¢ to $1.34 on Tuesday. Concurrently with its half-year update, HCW announced that Mr. Sharma would oversee HMC Capital's real estate activities, including HCW. Meanwhile, Christian Soberg, formerly HCW's chief financial officer, will be HCW's senior portfolio manager.
 
                                                                                     
                                                                                     
                                                                                     
                                                                                     
                                                                                     
                                                                                     
                                                                                     
                                                                                    ![“Surprise Noises Can Feel Like Pain”: New Airport Rule Eases Travel for Autistic Passengers Emma Beardsley once dreaded going through airport security. “I used to panic every time they made me take my headphones off at security,” she recalls. “The noise and the unpredictability can be overwhelming.” Now, thanks to a new policy allowing noise-cancelling headphones to remain on during security checks, Beardsley says she can “travel more confidently and safely.”
In Australia, one in four people lives with a disability, yet the travel system has often failed to accommodate varied needs. Autism-inclusion advocates at Aspect Autism Friendly have welcomed the government’s updated guidelines that let autistic travellers keep their noise-reducing headphones on during screening, calling it a “major step” toward more accessible air travel.
Dr Tom Tutton, head of Aspect Autism Friendly, emphasises the significance of travel in people’s lives: it connects them with family, supports work and learning, and offers new experiences. But he notes the typical airport environment can be especially intense for autistic travellers:
“Airports are busy, noisy, random and quite confusing places … you’ve got renovations, food courts, blenders, coffee grinders, trolleys clattering … and constant security announcements. It’s really, really overwhelming.”
“What might be an irritation for me is something that would absolutely destroy my colleague [who has autism]. Surprise noises of a certain tone or volume can genuinely be experienced as painful.”
Under the new policy — now published on the Australian Government’s Department of Home Affairs website — passengers who rely on noise-cancelling headphones as a disability support may request to wear them through body scanners. The headphones may undergo secondary inspection instead of being forcibly removed.
Dr Tutton describes this adjustment as small in procedure but huge in impact: it removes a key point of sensory distress at a critical moment in the journey. Aspect Autism Friendly is collaborating with airports to ensure that all security staff are informed of the change.
For many autistic travellers, headphones aren’t just optional — they are essential to navigating loud, unpredictable environments. Until now, being required to remove them during security has caused distress or even deterred travel.
Aspect Autism Friendly also works directly with airports, offering staff training, autism-friendly audits, visual stories, sensory maps, and other accommodations. Their prior collaborations include autism-friendly initiatives with Qantas. Dr Tutton notes:
“Airports have become this big focus for us of trying to make that little bit of travel easier and better.”
He advises people planning trips for travellers with disabilities to consult airport websites ahead of time. Some airports already offer quiet rooms or sensory zones — Adelaide, for instance, provides spaces where travellers can step away from the noise and regroup before boarding.
Beyond helping autistic individuals, Dr Tutton believes that more accessible airports benefit everyone. “These supports help lots of other people too,” he says. “When people are more patient, kind and supportive, the benefits flow to everyone. We all prefer environments that are well-structured, sensory-friendly, predictable and easy to navigate.”](https://c3eeedc15c0611d84c18-6d9497f165d09befa49b878e755ba3c4.ssl.cf4.rackcdn.com/photos/blogs/article-1061-1759742013.jpg) 
                                                                                    