Investing in Australia
Inside EG Funds: an Australian medical office roll-up built on a decade-late repricing, operator-first underwriting, and a GP stake for whoever is willing to be the accelerant.
Interview
Key Takeaways
A government price hike just reset medical office economics.
Australia raised bulk billing Medicare rates 66% in 18 months, from $42 to $70 for a standard consult, and rent on the real estate underneath those practices hasn't moved yet.
Australia is running the American playbook 10 to 15 years late.
Physician ownership of medical office has dropped from 60% to under 40% in the U.S. over the last decade. In Australia, only 8% of medical office is consolidated, and the largest owner holds 200 of the country's roughly 8,000 practices.
EG doesn't raise rent, it grows the tenant's business.
A typical deal buys a $20 million medical center at a 6.5% yield, then adds $3 million of capex at an 8% return. That funds renovated rooms, added consulting suites, and higher-paying sub-tenancies like pathology, which can cover 60% of a landlord's rent roll from a single 9-square-meter room. EG does all of that before it ever asks for more rent.
The real opportunity might be the GP, not the real estate.
EG has funded its first deals through balance sheet capital and private wealth syndicates. Two are closed, a third is underway, and the portfolio is building toward roughly $100 million. Now EG wants an institutional partner to take a stake in EG Healthcare itself. That's the ticket size that fits Australia's $4.4 trillion superannuation system, whose managers are too big to write checks under roughly $500 million.
Team Members
Shay spent eight years building Octopus Healthcare in the UK. He grew its specialist fund from inception to roughly $3 billion under management, turning it into one of Britain's largest investors in aged care, retirement living, and primary care real estate. He then ran Aurora Care & Education, a $250 million UK care and education operator, as Executive Chairman through its turnaround. He built three healthcare investment teams from the ground up over 24 years, then joined EG as Partner in 2022.
Stephen Rich started out running REIT research teams at Credit Suisse, UBS, and Deutsche Bank. That work gave him an equities-side view of how institutions actually price real estate risk. He spent the next five years as managing director of M3 Capital Partners in Hong Kong, leading real estate capital raises across Asia, including GLP's European market entry through the Gazeley acquisition. Twenty years spent connecting real estate operators with institutional capital across Asia, Europe, and the Americas led him to EG, where he joined as Head of Capital in 2023.