Highlights

  • FY26 Funds From Operations (FFO) was 4.0 cents per unit, or $21.9 million, while underlying FFO was 7.7 cents per unit.
  • HCW reported 100% rent collection, 99% occupancy and 4.1% like-for-like net Operating Income growth.
  • Net tangible Assets were $1.35 per unit at June 2026, while cash and undrawn Debt totalled $158 million and gearing was 29%.
  • FY27 guidance includes FFO of at least 4.0 cents per unit and distribution guidance of 6.0 cents per unit, subject to resolution of the Healthscope situation.

HealthCo Healthcare & Wellness REIT (ASX:HCW) reported its FY26 results on 18 August 2026, with portfolio operating metrics remaining comparatively stable as the REIT continued to address the Healthscope situation. HCW recorded FY26 funds from operations of 4.0 cents per unit, equivalent to $21.9 million, while underlying FFO was 7.7 cents per unit on a look-through basis including its 49.6% share of the Unlisted Healthcare & Life Sciences Fund (UHF).

The portfolio recorded 100% rent collection during the period and 99% occupancy by gross lettable area. Like-for-like net operating income increased 4.1%, excluding assets divested during FY26 and the expected Credit loss provision.

Portfolio Performance

HCW's operating portfolio continued to generate rental income across its healthcare and wellness property assets. The 100% rent collection rate extended through August 2026, according to the company, including rent associated with the period immediately following the end of FY26.

Occupancy was 99% by gross lettable area, while like-for-like NOI increased 4.1%. The NOI calculation excludes properties divested during FY26 and incorporates market reviews.

These figures provide a measure of the underlying property portfolio's performance while HCW manages the separate operational and financial considerations associated with Healthscope.

Healthscope Transition

Healthscope remains a central issue for HCW entering FY27. The company reported that healthcare services have continued across all hospitals and that the transition of Mount Private Hospital remains on track, with a new Lease scheduled to commence in October 2026.

HCW also said terms have been agreed with experienced Australian private hospital operators for the remaining 10 hospitals owned by HCW and UHF, although the arrangements remain subject to approvals from the Receiver and Healthscope lenders.

Independent valuations incorporating the proposed new lease arrangements indicate no material change to HCW's June 2026 NTA of $1.35 per unit.

HCW said it continues to work with relevant Stakeholders on the broader situation, with the objective of resolving the matter during the first half of FY27.

Balance Sheet Position

HCW ended June 2026 with $158 million of cash and undrawn debt. Gearing was 29%, which was below the REIT's stated target range.

The Balance Sheet position provides HCW with available Liquidity while it works through the Healthscope transition and evaluates portfolio initiatives. The company is also considering selective asset sales, with a stated focus on reducing the discount to NTA.

FY27 Earnings and Distribution Outlook

HCW expects FY27 FFO to be at least 4.0 cents per unit. The guidance reflects initially lower cash distributions from UHF during the transition period.

On a look-through basis, including HCW's share of UHF earnings, underlying FFO is expected to be 6.1 cents per unit. This represents a decline from the 7.7 cents per unit of underlying FFO reported for FY26.

The company has provided FY27 distribution guidance of 6.0 cents per unit, subject to resolution of the Healthscope situation. HCW expects the distribution to be funded by operating earnings and existing cash reserves.

The REIT expects UHF distributions to increase over time once the transition to alternative operators has been completed.

Conclusion

HCW's FY26 result combines stable property-level performance with a period of transition around its Healthscope exposure. The REIT recorded 100% rent collection, 99% occupancy and 4.1% like-for-like NOI growth, while maintaining $158 million of cash and undrawn debt and gearing of 29%. However, FY27 underlying FFO guidance of 6.1 cents per unit is below FY26's 7.7 cents, reflecting initially lower UHF cash distributions. The outcome for FY27 will therefore depend significantly on the orderly transition of Healthscope hospitals, implementation of the new lease arrangements and the subsequent recovery in UHF distributions.