Growthpoint’s healthcare fund tops R3.2bn with Cintocare Hospital acquisition

Almost three years after establishing a healthcare-focused property fund, Growthpoint Properties has developed and ‘sold’ its first greenfields hospital in South Africa – a new high-tech facility in the capital city.

Growthpoint – the largest primary-listed real estate investment trust (Reit) on the JSE – spent R470 million to develop the Cintocare Hospital in Tshwane’s burgeoning Menlyn Maine green precinct.

On Tuesday Growthpoint announced in a Sens statement that it had sold the hospital to Growthpoint Healthcare Property Holdings (Growthpoint Healthcare) for just over R515 million.

It is a ‘related-party transaction’ as Growthpoint is the major shareholder in Growthpoint Healthcare, an unlisted fund that it launched in early 2018 as a new venture into the niche healthcare property space.

Following the Cintocare Hospital acquisition, the fund now owns six private hospital properties and a ‘medical chambers’ building, which brings its assets under management to just over R3.2 billion.

All previous acquisitions (largely in KwaZulu-Natal and the Western Cape) were of existing healthcare facilities, while the latest deal represents Growthpoint’s first hospital developed in-house under its developments division.

Profit as well as rental income

The new hospital will be leased and operated by Cintocare Proprietary Limited, a new private healthcare group. This means that Growthpoint benefits from the deal from both a development-profits perspective and through rental income, via the Growthpoint Healthcare fund.

Read: Netcare and Standard Bank in R1bn ‘green bond’ deal

“The Cintocare Hospital property is a world-class 100-bed facility and [the] first hospital to be developed on balance sheet by the group,” says Growthpoint SA CEO Estienne de Klerk.

“It is a private facility that specialises in head, neck, spinal and vascular surgery. The hospital boasts state-of-the-art technology and many firsts for the continent, such as being Africa’s first green-star rated hospital,” he adds.

Oxygen plant

Dr Linda Sigaba, Growthpoint Healthcare’s fund manager, points out that the Cintocare Hospital is also the first hospital in South Africa, and arguably Africa, to generate its own oxygen on demand.

“We have used Pressure Swing Adsorption technology and have installed a plant to produce oxygen on site when needed,” he says.

“The hospital also has a fully robotic pharmacy, which processes and then sends medication via chutes to the relevant section of the hospital for use,” adds Sigaba.

De Klerk says all these elements “future-proof” the hospital, which has been signed on a 30-year lease.

“So it goes beyond just being a green building. We also have space to expand the hospital to 160 beds based on future demand,” he notes.

De Klerk tells Moneyweb the entire hospital project represents an investment of almost R700 million.

Besides Growthpoint’s R470 million investment to build the hospital, Cintocare has injected R150 million into equipping and fitting out the hospital, while the hospital’s separately managed radiology unit represents another R70 million investment.

“We have a great partnership with Cintocare and are proud to be with them at the cutting edge of creating a new clinical model in South Africa,” says De Klerk.

“Together, we have pioneered and paved the way forward for specialist medical facilities in the country while establishing the specifications for a green building certification tool for local healthcare properties, which didn’t exist before this development,” he adds.

Growthpoint’s share price closed almost 3% up on the news on Tuesday, at R13.53 a share.