Private investors put €38m into hospital

PRIVATE INVESTORS are putting up €38 million for the last hospital development supported by a tax-relief scheme closed in the April budget.

Minister for Finance Brian Lenihan announced in the emergency budget two months ago that the tax break to fund private healthcare facilities would close this year. St Vincent’s new private hospital is likely to be the last such development to benefit from the tax break, which gives backers capital allowances of €388,267, over seven years, for every €100,000 they invest.

The new hospital is being built at a cost of €192 million, with €38 million provided by private equity backers recruited by Dublin firm Goodbody Stockbrokers and a €154 million loan from Bank of Ireland, which came on board a number of weeks ago.

It is understood that Goodbody has recruited most of the backers, who have to invest a minimum of €100,000 each, with further increments in units of €25,000.

The allowances of €388,267 can be written off against property rental income, which is the main incentive for private backers. The hospital should be up and running next year, meaning investors can start claiming the allowance in 2010.

The investment is locked in for 15 years, at which point the developer, St Vincent’s Healthcare Group (SVHG), buys the hospital from the investors.

SVHG is building the new facility to replace the existing private hospital at its complex at Elm Park on Dublin’s southside.

Figures contained in documents sent to investors show that SVHG had revenues of almost €365 million last year, and had a surplus of €2.1 million. Revenues grew steadily from €227.5 million in 2003, although the surplus earned by the hospital varied, reaching €5.4 million in 2003, hitting a low of €800,000 the following year.

SVHG is made up of St Vincent’s University Hospital, St Vincent’s private hospital and St Michael’s hospital in Dún Laoghaire.