Charter Hall acquires $445 million Sonic Healthcare life science facility on a 20-year triple-net sale and leaseback

Charter Hall Group (Charter Hall or the Group) and Sonic Healthcare today jointly announce the settlement of a $445 million transaction under which Charter Hall has acquired a 100% interest in the Sullivan Nicolaides Pathology life science facility located in the Brisbane CBD suburb of Bowen Hills.

Sonic Healthcare developed the facility over multiple stages as a national reference centre for highly specialised pathology testing and the main laboratory for Sonic Healthcare’s Sullivan Nicolaides Pathology operation, the pathology market leader in Queensland and Northern NSW. The facility is an important piece of healthcare infrastructure for Queensland and Australia. The initial net rent of $25 million per annum, with inflation-indexed rental increases, delivers a mutually beneficial outcome for both Sonic Healthcare and Charter Hall.

The property sits in a new institutional partnership owned and managed by Charter Hall with the Charter Hall Social Infrastructure REIT (CQE) investing $53 million of equity for a 25% stake with the remainder of the equity to be owned by other Charter Hall managed funds.

Charter Hall Managing Director & Group CEO, David Harrison said, “This acquisition is aligned with our strategy to invest in long WALE essential service assets and provide the opportunity to multiple funds. With more than $12 billion of sale and leaseback, long WALE assets secured over many years, we see this new Sonic Healthcare relationship expanding our investment grade corporate relationships with excellent long term secure cash flows for our investor customers.

“We continue to see compelling opportunities in long WALE assets and believe these attractive yielding non-residential investments providing a compelling investment proposition through multiple cycles.”

Sonic Healthcare Finance Director and CFO Chris Wilks added, “This transaction is consistent with Sonic’s capital management strategy and focus on return on invested capital, releasing capital that can be deployed at higher returns, and crystallising increased value that was not reflected in Sonic’s financial statements. We welcome this long-term relationship with Charter Hall.”

The transaction was negotiated by Bruce Baker of CBRE on behalf of the vendor.