Provider of medical equipment, devices, and consumables Paragon Care Limited (ASX: PGC) has entered into a strategic partnership with Centuria Healthcare for the long-term lease of a state-of-the-art clean room facility, laboratories, and office complex in the Monash precinct located in the Eastern suburbs of Melbourne.
Under the terms of the strategic partnership, Centuria will take possession of the property in December 2021 and fund the upgrade of the facilities to a state-of-the-art clean room, laboratories, and office complex to Paragon specifications with works to be completed in April 2022.
This new state-of-the-art facility will enable Paragon to expand its laboratories that manufacture Immulab’s world-leading blood reagent products to meet future demand in Asia with minimal upfront capital cost.
Following completion of Centuria’s refurbishment works in April 2022, a fit-out is expected to take three to six months with Paragon moving into the new state-of-the-art facility in December 2022.
As part of Paragon’s ongoing streamlining of its business operations, Paragon has entered into a 15-year lease with Centuria where it will consolidate all of its Victorian operations over the next 12 to 18 months.
This new long-term lease will increase the right-of-use asset and related lease liability on Paragon’s balance sheet in accordance with AASB 16: Leases (AASB16), however, the discontinuation of other existing Victorian leases will also decrease these numbers. The net change expected is an additional lease liability on Paragon’s statement of financial position of approximately $20 million due to the long-term nature of the new state-of-the-art premises lease.
Paragon Care CEO, Phil Nicholl, said completion of its rationalisation program will result in an increase of Paragon’s Victorian rents from $1.4m to approximately $1.8m.
This strategic partnership with Centuria Healthcare is a significant event for Paragon Care, as we establish state-of-the-art laboratory and manufacturing facilities which will enable us to more than double our manufacturing capabilities of our world leading blood reagent products as we start expanding into key Asian markets including China, Thailand and Vietnam,” Mr Nicholl said.
:”Paragon wishes to acknowledge the invaluable contribution from the Department of Jobs, Precincts and Regions in respect to this project”.
Centuria Healthcare is part of the wider ASX-200 listed Centuria Capital Group (ASX: CNI), which has more than $18 billion of funds under management. Centuria Healthcare is a specialist funds manager of healthcare real estate assets across Australia, with a portfolio of 56 high-quality assets worth approximately $1.3 billion as at November 26, 2021 (including fund-through projects on an “as-if complete” basis). Nationwide, Centuria Healthcare actively partners with providers to deliver efficient, cost-effective healthcare facilities, including developing and funding new assets.