Major medical centre a healthy investment

The Eastmed Doctors Medical Centre at 188 St Heliers Bay Rd. Photo / Supplied

The Eastmed Doctors Medical Centre in St Heliers which sits on the former Auckland Adventist Hospital site has been placed on the market by Vital Healthcare Property Trust which is divesting the property as part of its rationalisation of some non-core assets.

"With several services under one roof, the centre provides a one-stop medical shop for local residents within an affluent suburban area," says Charlie Oscroft of Colliers International, who is marketing the property with colleague John Davies, for sale by deadline private treaty closing at 4pm on Thursday, September 22, unless it is sold prior to that date.

The property at 188 St Heliers Bay Rd is a modern, purpose-built 2174sq m medical centre building which sits on a 6355sq m freehold site with more than 80 on-site carparks.

Almost 20 healthcare-related tenants occupy the building and pay annual rental income of $779,814, with most having rent reviews every one to three years.

"The centre has a pharmacy, radiologist, dentist, podiatrist and physiotherapist on site as well as a doctors' surgery and a cafe and other services," Oscroft says.

He says the building is a well-maintained, low-rise complex comprising three main areas. The first, accessed via the north-facing main reception entrance, houses various leased areas including the premises occupied by Eastmed Doctors, who operate nine consulting rooms and associated administration areas.

Other key tenants occupying space near the main entrance are Dilworth Audiology, Horizon Radiology and Eastmed Pharmacy. The cafe and common areas are adjacent to a secondary entry.

Towards the rear of the building, suites occupied by tenants include Labtests and 188 Specialist Centre, which provides consulting rooms for some 16 different medical specialist groups on a sessional basis.

Smaller tenancies in this part of the building include a podiatry clinic, Eastmed Dental Centre and Diagnostic Medlab.

Davies says this is an extremely attractive part of the building, providing suites of various sizes and common zones, with a central high-stud glazed atrium providing a visual focal point.

"Each of the suites in this area has plenty of natural light due to the irregular, angled walls," he says. "This provides a big drawcard for tenants, combined with the fact that the suites are available on a 'turn-key' basis and are already fitted out to a high standard with carpet, blinds, air conditioning and partitioning."

Most of the basement area space is leased out to St John Ambulance. Oscroft says the medical centre, which is one of the primary centres serving the eastern suburbs of Auckland, occupies an enviable location in an upmarket residential precinct.

"Eastmed Medical Centre sits on an elevated ridgeline and has a sunny northerly aspect. It is a fantastic location amidst a large, wealthy residential catchment less than 1.5km south of the St Heliers Bay commercial centre."

The Grace Joel retirement village shares the old Adventist Hospital site with Eastmed, providing a further market for the on-site businesses such as the pharmacy and cafe, although both facilities are on separate freehold titles.

"The plentiful on-site carparks also make the medical centre one of the most convenient in the area," Oscroft says.

Davies says the sale presents a rare opportunity for investors, who could be high-net worth individuals or family trusts, to enter the healthcare property sector.

"It's difficult to find fault with this investment. For a passive investor it's an ideal, stable, income-generating asset," Davies says. "It is a well-maintained and presented building that occupies a premium position in an affluent suburb, and is tenanted by a variety of healthcare practitioners and associated services."

However, he says the property offers opportunities for a more active buyer, too.

"A keen investor with an eye for upside could reconfigure the basement area and enhance the range of private medical specialist offerings on-site which would add further value to the site," he says. "Furthermore, the large number of leases in place and the frequency of rent reviews provide an ideal platform for a new owner to collaborate with tenants and enhance the net rental returns and overall lease profile."

The Adventist Hospital, run by the Seventh-Day Adventist Church, practised its healthcare mission for 25 years on the site. This ended in late 1999 with the sale of the hospital.

colliers.co.nz