HESTA, an industry superfund, and ISPT, an industry superannuation fund-backed property investor, have teamed up to co-develop a $140 million ‘on hospital campus’ medical office building of circa 12,000 m2 in Melbourne.
The organisations have formed a joint venture partnership to acquire a 50-year ground lease from St Vincent’s Health Australia (SVHA), on which they will co-develop the project.
The deal will see the ISPT Core Fund and HESTA each co-invest 50%. St Vincent’s will pre-commit to lease approximately 5000 m2 of the building for 10 years, as it relocates its existing administration, office and health services from other hospital and satellite campuses.
St Vincent’s Health Australia’s Interim Group Chief Executive Officer, Ruth Martin, said, “This is an exciting development — for St Vincent’s and for Melbourne’s healthcare landscape more broadly.”
St Vincent’s is in the process of building and delivering “an internationally renowned healthcare and medical research centre in the heart of Melbourne”, and the announcement by ISPT and HESTA is an endorsement of that vision, Martin said.
“To be built alongside the under-construction Aikenhead Centre for Medical Discovery — and on the same grounds as St Vincent’s Hospital Melbourne and St Vincent’s Private Hospital Fitzroy — the planned development means more Australians will benefit from the groundbreaking clinical care and research carried out by St Vincent’s and our partners.”
The land at 31–35 Victoria Parade, Fitzroy is zoned for Public Use — Health and Community under the City of Yarra and is currently occupied by the former Brenan Hall building and an adjacent vacant site, which has been owned by St Vincent’s for a number of years and earmarked for development under its campus masterplan.
Under ISPT and HESTA’s development proposal, designed by Bates Smart, the existing heritage listed Brenan Hall will be retained and incorporated into the ground floor of the 12-level + basement, mixed-use healthcare accommodation building. The co-development represents a $140 million investment into the precinct.
Robert Pepicelli, General Manager, Healthcare & Life Sciences at ISPT, said, “We like the opportunity to combine the resources and expertise of ISPT, our investors’ aligned capital and our operator partners to ensure ongoing investment into the important healthcare and life sciences sector, which is a major employer and driver of economic activity in Australia.”
“In this case, we are actively partnering with St Vincent’s to continue its valuable work in providing important medical research and health services to Australians.
“We are focused on working with operators at the early stages of their real estate planning to participate in the design, development and long-term ownership of the physical infrastructure which supports their operations.”
HESTA Chief Investment Officer Sonya Sawtell-Rickson said, “This investment with ISPT supports our continued focus on identifying opportunities in Australia’s fast-growing healthcare sector.”
ISPT and HESTA are currently working through a proposed development scheme with the aim to submit plans to council in the coming months. Once approved, the project is earmarked to reach practical completion by 2025.
Tom Byrnes from Charter Keck Cramer and Andrew Grant of APG Advisory brokered the transaction.