HealthCo Healthcare and Wellness REIT (ASX:HCW) used its FY26 half-year earnings call to emphasize portfolio resilience, balance sheet liquidity and the ongoing work to manage uncertainty surrounding Healthscope, the tenant across 11 hospital properties. Management said rent collection remains complete under existing contracted arrangements, while the trust continues discussions with receivers and alternative operators to secure long-term continuity of hospital services and protect unitholder value.
Portfolio performance and valuation comments
Management said the portfolio delivered 100% rent collection, 99% occupancy and 4.2% net operating income (NOI) growth for the half. The trust highlighted its scale, noting it holds approximately AUD 1.4 billion of assets.
On the Healthscope hospital portfolio specifically, the company said the 11 hospitals were independently valued at AUD 1.4 billion as at December 2025. Management described the assets as critical healthcare infrastructure and said they are working to provide continuity of service across all 11 facilities.
Liquidity, leverage and distributions
HealthCo reported AUD 155 million of cash and undrawn debt as of December and said gearing of 28.5% was “well below” relevant limits discussed on the call. The trust also referenced AUD 77 million of asset recycling completed during the half, which contributed to liquidity and “strategic flexibility.”
Funds from operations (FFO) were discussed in the context of paused distributions. Management said FFO of AUD 0.022 per unit was affected by the non-declaration of distributions from the unlisted healthcare fund. HCW and the unlisted healthcare fund will recommence distributions once the Healthscope situation has been resolved.
Net tangible assets (NTA) moved versus June, which management said was “primarily driven” by an expansion of the portfolio cap rate by 26 basis points.
Healthscope situation: receivership and operator transition planning
A key focus of investor questions was Healthscope, which management said has been a prolonged process. Executives clarified that the receivership is at the TopCo level for Healthscope. Management reiterated that the trust has existing agreements and leases in place and emphasized that, to date, it has continued to collect “every dollar of every contractual commitment” from the operator.
Management said it is in “constructive discussions” with Healthscope and the receivers. The company also stated it is working with alternative operators and is seeking to ensure continuity of hospital services and alignment with unitholder and investor outcomes.
During the call, management addressed media speculation about “Purpose Co.” Executives said they had received correspondence from the receiver requesting that any proposal or submission relating to Purpose Co be provided for consideration. However, management said that, despite discussions with receivers and advisers, all it knows about Purpose Co is what has appeared in the media. If a proposal is submitted, management said it is contractually obliged to review it and would do so in light of its existing lease rights.
Incentives, rents and covenant considerations
In Q&A, management provided more color on how it is approaching potential transitions to future operators. Executives said prospective arrangements contemplate long-term leases and that face rents would remain unchanged, but that rental incentives could be provided to support “sustainable commercial arrangements” for incoming tenants.
Management characterized these supports as commercially sensitive, describing them as a “glide path” and indicating they would be delivered over a medium-term period. The company also noted that the accounting treatment of incentives spreads their impact over the lease term.
Importantly for lenders and equity holders, management said it has stress-tested the impact of the incentive structures on financial covenants. On interest cover, the company cited an ICR of 2.0x at the first half versus 1.75x (as referenced in the discussion), and indicated the contemplated arrangements would not undermine covenant compliance.
Other portfolio and operating notes
Beyond hospitals, management reiterated the portfolio’s broader mix across healthcare real estate, including mention of assets such as cancer care centers, aged care facilities, health hubs and a nursing college. The company also noted that government and national tenants represent a meaningful component of the tenant base, referencing major healthcare providers and Queensland Health.
On leasing conditions at Proxima, management addressed an occupancy dip raised by an analyst, describing the site as attractive due to its location near Gold Coast University Hospital and Gold Coast Private Hospital. Executives said they have been achieving better rents than anticipated and indicated they were “pretty relaxed” about leasing the remaining space.
Looking ahead, management said FY26 priorities include prudent capital management and reiterated that it does not intend to declare distributions until the Healthscope situation has been resolved. Executives closed by noting that investors are eager for resolution and that the trust is awaiting further proposals from the receiver to help bring the process to a conclusion.
About HealthCo Healthcare and Wellness REIT (ASX:HCW)
HealthCo Healthcare and Wellness REIT operates as a real estate investment trust that focuses on owning healthcare and wellness property assets in Australia. It invests in a portfolio of healthcare property assets, including hospitals, aged care, childcare, government, life sciences and research, primary care, and wellness property assets, as well as other healthcare and wellness property adjacencies. The company was incorporated in 2021 and is headquartered in Sydney, Australia.
