HealthCo Healthcare & Wellness REIT has collected all outstanding rent from Healthscope and extended a rent deferral to support the ongoing sale process, while suspending distributions to preserve liquidity.
- Received $12.7 million Healthscope rent for Q1 FY26
- One-month extension to partial rent deferral agreement
- Conditional lease agreements with alternative tenants for 11 hospitals
- Exchanged sale of Vitality Village for $26.5 million
- No distribution declared for Q1 FY26 to preserve liquidity
Healthscope Rent Collection and Deferral Extension
HealthCo Healthcare & Wellness REIT (HCW) and its partner, the Unlisted Healthcare Fund (UHF), have successfully collected $12.7 million in cash rent from Healthscope for the first quarter of fiscal year 2026. To facilitate the ongoing sale process of Healthscope, the landlords agreed to a one-month extension of the existing partial rent deferral arrangement. Under this extension, 85% of the October rent will be paid upfront at the start of the month, with the remaining 15% deferred rent from May to October 2025 scheduled for payment at the end of October.
This arrangement ensures that HCW and UHF have now received 100% of all rent due since the original portfolio transaction in 2023, maintaining a steady income stream despite Healthscope’s financial challenges. Importantly, all legal rights of the landlords, including cross-default and termination provisions, remain intact, preserving their position should circumstances deteriorate.
Alternative Tenant Agreements and Portfolio Stability
In anticipation of potential outcomes from the receiver-led Healthscope sale process, the landlords have proactively entered into conditional agreements with alternative tenants for all 11 hospitals in their portfolio. These agreements include commercially acceptable terms and are poised to be finalized if the current sale does not produce assignees and lease arrangements satisfactory to HCW and UHF.
The landlords emphasize their commitment to continuity of care, ensuring that hospital services remain uninterrupted, jobs for nursing and hospital staff are preserved, and the portfolio remains underpinned by financially robust operators with proven operational track records. This approach aims to safeguard long-term value for HCW unitholders and UHF investors alike.
Capital Management and Asset Sales
As part of its strategy to maintain balance sheet strength and flexibility, HCW has exchanged contracts to sell Vitality Village for $26.5 million. Alongside the recent settlements of three GenesisCare facilities, this sale contributes to a pro-forma cash and undrawn debt position of $130.3 million as of June 2025, with gearing at a conservative 29.6%, comfortably below the REIT’s target range.
Distribution Suspension to Preserve Liquidity
In a cautious move reflecting the ongoing uncertainty surrounding Healthscope, HCW has elected not to declare a quarterly distribution for the period from July to September 2025. This decision prioritizes preserving liquidity and balance sheet resilience. The REIT expects to resume distributions once the Healthscope situation is resolved, signaling confidence in a return to stability.
Overall, HCW’s latest update reflects a careful balancing act between supporting a major tenant through a challenging transition, proactively managing portfolio risk, and maintaining financial discipline to protect unitholder value.
Bottom Line?
HCW’s strategic rent collection and asset sales buy time, but the Healthscope sale outcome remains pivotal.
Questions in the middle?
- Will the Healthscope sale process conclude with acceptable assignees and lease agreements?
- How soon can HCW resume distributions to unitholders following the current suspension?
- What impact might alternative tenant leases have on the portfolio’s long-term income stability?