MD Estienne de Klerk said that he wanted to grow Growthpoint Healthcare to be worth R10bn in about five years, after which it could be listed separately. The separate company has been launched with a R2.5bn portfolio comprising two hospitals in Cape Town and two in Durban.
"SA's healthcare industry is very large. There are three large hospital operators and then quite a few up-and-comers.
"Many of these smaller, new groups have access to operating licences, but not to the capital they need to achieve the scale they want.
"We have recognised the opportunity to acquire hospital properties and then rent them out to these various operators," said De Klerk. Growthpoint Healthcare would invest in hospitals, step-down facilities and medical suites, he said. These assets could attract long leases and tended to be defensive.
Evan Robins, the listed property manager of Old Mutual Investment Group's MacroSolutions boutique, said if Growthpoint "got it right", a healthcare property company could be desirable for investors.
"A healthcare property fund could certainly be an attractive proposition," said Robins.
But Fayyaz Mottiar, head of listed property at Absa Asset Management, expressed concern about Growthpoint being an external manager of the healthcare group, saying that it was not in the interests of good governance.
"The whole industry has moved away from listed companies acting as external manager. We want to align the interests of management with those of shareholders," he said.
Growthpoint is the largest locally based real estate group in SA and its assets are worth R120bn on a consolidated basis including 100% of Growthpoint Australia. The company is trying to increase its exposure to defensive property assets.
Recently, it invested in eastern Europe for the first time, when it spent €186m (about R2.7bn at the time) on a 26.9% interest in Globalworth Real Estate Investment.
Earlier this month, CEO Norbert Sasse said the company's shopping centres were under some pressure due to retailers struggling through tough economic conditions.
"Retailers are under pressure. Many are seeking shorter leases. This can change when they choose to close branches. So overall, these are tough times for retailers. At least many of them are pulling back regarding developments, so we won't increase the oversupply of retail," said Sasse.
Growthpoint had implemented strategies aimed at increasing the contribution to its earnings by offshore assets from 19% to 30% within the next three to five years, he said.
Source: BDpro
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