Healthscope Ltd. (ASX: HSO), Australia’s second largest private hospital chain, is being sold once again, this time for $4.14 billion, or 1.8x revenue. The Melbourne, Victoria-based company owns 43 hospitals across all states in Australia and is the largest pathology services provider in New Zealand, with 24 laboratories.
Three buyers are involved, two of them real estate investment trusts (REITs). First, Brookfield Business Partners LP (NYSE: BBU), a subsidiary of Brookfield Asset Management Inc. (NYSE: BAM), will acquire 100% of Healthscope’s shares, priced at $1.81 (AU$2.50) per share. That returns approximately $1.0 billion in equity. The remainder will be paid with $1.4 billion of long-term financing and $1.7 billion from the sale and long-term leaseback of 22 hospital properties.
Brookfield beat out BGH-AustralianSuper Consortium, a group of financial investors who offered AU$2.36 per share at first, but upped their offer to AU$2.40 per share at the end.
That’s where the REITs come in. Concurrent with Brookfield’s announcement, Medical Properties Trust, Inc. (NYSE: MPW) said it will acquire 11 Australian hospitals from affiliates of Healthscope for an aggregate price of approximately US$859 million and lease the acquired real estate back to Healthscope.
Brookfield also teamed up with NorthWest Healthcare Properties REIT (TSX: NWH) to acquire a separate 11-hospital portfolio for approximately $1.2 billion. NorthWest intends to leverage its capital relationships and structure the deal so that it will manage the portfolio, but ultimately own 25% to 30% interest.
NorthWest’s Australian entity, NWH Australia AssetCo Pty. Ltd., previously disclosed a strategic interest in Healthscope and has partnered with Brookfield on its 100% share transaction. The property transaction is conditional on Brookfield’s completion of the Healthscope acquisition, which is currently expected to occur in the second quarter of 2019.
This isn’t Healthscope’s first time on the talkover dance floor. In July 2010, The Carlyle Group (then a privately held private equity firm) and TPG agreed to pay $1.73 billion in cash (1.2x revenue) for the publicly traded Healthscope (then ASX: HSP). In July 2014, Healthscope was again relisted on the Australian exchange.
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