Real Asset Management (RAM) has settled the acquisition of a $51.25 million asset at 20 Nellie Street, Nundah QLD, seven kilometres from the Brisbane CBD.
RAM will deliver a health precinct exceeding 10,000sqm, anchored by a 58-bed private mental health hospital on a new 25-year lease to operator iMH.
The facility will help alleviate Brisbaneʼs shortage of mental health beds and allow the operator to implement a new model of care combining in-hospital and at-home/in-community services.
The asset forms part of the RAM Australia Healthcare Opportunity Strategy, which is looking to invest up to $1 billion in Australian healthcare real estate in the near term.
“Nundah is an excellent example of the deal origination philosophy that we are pursuing for our healthcare real estate strategy, which involves a bottom-up approach in originating opportunities in collaboration with our operating partners,” said Matthew Strotton, RAMʼs Executive Director and Head of Real Estate.
Shortage of mental health beds
“There has been a recent surge in demand for mental health services throughout Queensland. Estimates of the stateʼs mental health bed shortage range between 400 and 2,100, so there is a huge opportunity to supply the gap. Our Healthcare Opportunity Strategy seeks to invest in these demand-driven opportunities when they present themselves,” said Sam Wood, RAMʼs Funds Management Director.
Aurora Healthcare has indicated increased demand for mental health services across many of its sites Australia-wide over the past four years.
“We worked closely with our partner, iMH — a joint venture between Aurora and Medibankʼs Amplar Health — to identify a suitable site for a new facility that would offer them space to implement their innovative model of care.”
“Our operating partners are closest to the business conditions on which our assets ultimately depend. Trusted relationships with our partners mean we better appreciate their space needs and the needs of the communities they serve,” Wood said.
New model of care
“Nundah Private Hospital will provide Integrated Private Mental Health services to Northern Brisbane communities. This new model of care in mental health private services is a first for the Brisbane area with the hospital set to open in the second half of 2024. Aurora Healthcare has delivered services to the greater Brisbane area for over 50 years through our Belmont Private Hospital. Nundah Private Hospital enables us to extend our services to the northside of Brisbane, with a new model of care, whilst also leveraging our years of expertise in private mental health specialisation,” said iMH Director, Julia Strickland-Bellamy.
Build-to-core strategy
In addition to its bottom-up, operator-led approach to asset identification and development, RAM highlighted its build-to-core strategy, which manages risk across an assetʼs lifecycle and achieves the dual objective of growth and income for investors.
“Before contracting any acquisition, we pre-let a majority of the space available in the development or value-add opportunity. Prior to the settlement of Nundah, RAM had added approximately $18 million in value through planning and leasing, and reached occupancy of 68%,” said Wood.
Relationship to other RAM portfolios
RAM has a proven track record in the healthcare real estate sector through its ASX-listed REIT, the RAM Essential Services Property Fund (ASX:REP). The unlisted RAM Australia Healthcare Opportunity Strategy complements REP by pursuing a wider range of risk assets and creating synergy in operations and development.
“Nundah has shown how we have broadened our development and deal origination capabilities through our healthcare opportunity strategy, which carries a broader risk mandate than our flagship vehicle, REP. This enhancement will offer REP a wider set of opportunities, thereby providing greater access to suitable assets within the RAM ecosystem that align with its mandate,” Strotton concluded.