Axon Capital Private Medical Property Trust

Axon Capital has secured the acquisition of Toronto Private Hospital, a 105-bed mental health and rehabilitation facility in the Hunter Region. This asset is leased to the leading national operator, Aurora Healthcare, for a remaining term of 18 years.

This opportunity allows for investment in critical healthcare infrastructure at a material discount to historical pricing and replacement cost. The acquisition is priced at $39.5 million, reflecting a favourable 6.9% capitalisation rate compared to the historic 5.0%. With current rent significantly below market rates, there is a clear pathway for growth.

The investment forecasts a 7.0% distribution yield and a 1.7x equity multiple over a four-year hold. This transaction represents a prime hospital acquisition in a post-COVID interest rate environment, acquired with clean capital and no legacy portfolio issues.

Axon Capital has secured an exciting opportunity to acquire Toronto Private Hospital, which is under contract. Toronto Private is a 105-bed, purpose-built mental health and rehabilitation facility located in the Hunter Region of NSW. The asset is leased on a net basis to Aurora Healthcare, a leading national operator with 17 hospitals and a strategic joint venture with Medibank Private (ASX: MPL).

The lease has 18 years remaining, with a significant market rent review in January 2028.

This opportunity exists because Australia’s core healthcare strategies are facing structural liquidity issues and balance sheet pressures that make it difficult for them to participate in acquisitions—providing selective opportunities with attractive economics at this point in the cycle:

• Capitalisation rate: 6.9% (vs. historic 5.0%)
• Purchase Price: $39.5 million
• Rent/bed: $25,910 p.a. ($27,000-$32,000 p.a. market on conservative basis), compared to:
  • Market average (ex-Healthscope): $31,447 (+21%)
  • NSW average (ex-Healthscope): $33,443 (+29%)
  • Healthscope average: $45,402 (+75%)
• Replacement cost: Estimated at ~$60.6 million (35–45% above purchase price)

Forecast fund returns follow:

• 0% distribution yield (paid monthly)
• 7x equity multiple / 15.0% IRR (base case) over a 4-year hold
• Pathway to 2.0x equity multiple / 17.0% IRR in upside scenario

Toronto Private is a land-rich, operationally proven, and the only pure-play private mental health and rehabilitation hospital in the growing Hunter Region. Demand for such a facility is rising, driven by an aging population and a reported regional mental health incidence of 1 in 4 residents—above the state average.

This is the first prime hospital to transact since the post-COVID interest rate rebase. While many healthcare property managers are still carrying assets on book values around 5.0–5.5%, Axon is stepping into the market with clean capital and no legacy issues—acquiring critical healthcare infrastructure at a material discount.

Below is a summary of the key information regarding the hospital.

The lease is a whole of land lease structured as a net lease with a remaining term of ~18 years. 

• 105 bed mental health and rehabilitation hospital
• 18 credentialed staff specialising rehabilitation, mental health, robotic assisted therapy and palliative care
• 71 car spaces for patients, staff and visitors

The tenant, Aurora Healthcare, operates a national portfolio of 17 private hospitals and is recognised as a leading specialist mental health and rehabilitation hospital operator.

The Property is: 

• Generating net passing income of ~$2,720,000 which represents a ~6.9% passing yield based on the $39,500,000 gross purchase price 
• Located at 241A Excelsior Parade, Toronto NSW 2283 (southern end of the Hunter Region) 
• Occupied by Aurora Healthcare pursuant to a Lease that has an expiry date of 31 December 2032¹;  
• A summary of the key lease terms can be found in Appendix 1; and 
• Occupies 7,250 square meters of land and boasts 5,170 square meters of building area together with 71 car parks and 31 at grade parks for the strata medical centre.  

A summary of the key fund features follows:  

• The transaction will be funded with: 
  • $21,725,000 of Australian bank debt (55% initial leverage); and  
  • $22,000,000 of investor equity.  
• The Trust will have a fixed term of 4 years, although the Manager will have a right to extend the term if market conditions are not conducive to maximising the shareholders’ risk adjusted returns 
• The fund is intended to be a single asset trust 
• The fees are outlined in Section 3.12 of this document 

A summary of the key financial model assumptions used to estimate fund returns follows:  

• Purchase price $39,500,000 
• Passing income ~$2,720,000 
• Debt and leverage: 
  • 7% spread over the swap curve 
  • Swap curve as provided by Westpac Bank on 22 April 2025 
• CPI assumptions based on figures supplied by Westpac Bank on 22 April 2025 
• Market rent review in December 2028 generating an increase in the passing rental by 5.0% meaning that: 
  • CPI would equal 3.0%; and 
  • Market determination of rental being 7.0%. 
• The sale contract includes a retention of $1,250,000 set aside to meet the short to medium capital expenditure required at the Property, these funds will be used to fund the capital expenditure identified during due diligence 
• A further ~$245,000 has been provisioned for in year 1 for capital expenditure; and 
• Exit yield of 6.25%.

¹ Including 2 x 5-year landlord options

Toronto Private Hospital is operated by Aurora Healthcare, one of Australia's foremost providers of mental health services. Aurora Healthcare is part of Luye Medical Group (HKEK:2186), a leading healthcare organization ranked among the top 10 service providers in the Asia-Pacific region.

The Toronto facility is one of 16 private hospitals under Aurora Healthcare's ownership. It features 105 beds and 18 credentialed staff, offering specialised services in rehabilitation, mental health, robotic-assisted therapy, and palliative care.

Aurora Healthcare operates across Australia, delivering high-quality care through its extensive network of hospitals and facilities. The group specialises in mental health, and rehabilitation services, ensuring a broad spectrum of patient needs are met. Its focus on patient-centric care and continuous improvement has established Aurora as a trusted name in the Australian healthcare landscape.

Aurora has established a relationship with major private health insurer Medibank (ASX:MPL) (AUD $7.85 billion in revenue in FY24). This affiliation enables Aurora to leverage international best practices, innovative technologies, and advanced medical systems, strengthening its ability to deliver exceptional healthcare outcomes across its portfolio.