Archive | Vital Healthcare Property Trust

Vital enters asset & redevelopment partnership with Acurity

Vital Healthcare Property Trust has entered into a conditional partnership with Acurity Health Group Ltd as its long-term real estate capital partner to support growth & redevelopment initiatives for Acurity’s portfolio of private hospitals in New Zealand.

Vital management company chief executive David Carr said yesterday the first stage of this partnership included agreement to acquire the real estate assets at Acurity’s Wakefield & Bowen private hospitals in Wellington for about $68 million. This agreement remains subject to certain presettlement conditions being satisfied, including Overseas Investment Office & development project approvals.

Mr Carr said the development projects would include a significant redevelopment of Wakefield Private Hospital in Newtown and were likely to cost in the order of $100 million.

“With agreed lease terms of 30 years, a long-term partnership with Acurity at these established private hospitals is a rare & unique opportunity for Vital and strongly aligns with our scale & diversification strategy. The brownfield development pipeline was a key attraction, but to have also secured agreement to work alongside Acurity in relation to other opportunities in the New Zealand market was also important.”

Acurity’s third hospital is the Royston Hospital in Hastings. The NZX-listed company, formerly Wakefield Health Ltd, also owns Norfolk Investments Ltd, which owns & manages Grace Hospital in Tauranga in partnership with Southern Cross Hospitals, and holds 50% of Endoscopy Auckland Ltd & Laparoscopy Auckland Ltd. Integrated Hospitals Ltd, which owns the Mercy Ascot hospital group, holds the other 50% interest in those 2 companies.

After a complicated takeover in 2014-15, Acurity’s ultimate owner is the Evolution Healthcare Group, based in Sydney.

Attribution: Company release, Acurity & Evolution websites.

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Vital completes 3 acquisitions

Vital Healthcare Property Trust has made 2 acquisitions in Australia for a combined $A27.6 million, at a weighted average yield of 7.2%, and also settled its $33 million acquisition of Ormiston Hospital in Auckland.

Management company chief executive David Carr said on Wednesday the Australian purchases supported the trust’s strategy of adding both scale & diversifying.

The trust has bought the Grafton Aged Care facility in northern New South Wales with aged care partner Hall & Prioron an initial 20-year lease term. It has 43 rooms & 83 beds. Vital has also bought 2 adjacent residential properties for potential expansion. Total land area of the acquisition is about 12,400m².

Mr Carr said Vital had acquired the fitout & a 6-year lease extension to 25 year at Epworth Eastern Hospital in Melbourne, simplifying the ownership structure in preparation for further potential development.

Vital announced its acquisition of the 31-bed Ormiston Hospital in Flat Bush in February. It was purpose-built in 2008 and is the only private surgical hospital in the Counties Manukau District Health Board catchment.

Attribution: Company release.

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Vital pushes long-term value strategy

Vital Healthcare Property Trust today announced a strong interim result for the December half-year yesterday.

Highlights:

  • Gross rental income up 54.4% to $51.8 million
  • Pretax operating profit up 58.4% to $42.2 million
  • Net distributable income up 87% to $35.5 million
  • Net interim revaluation gain $13.1 million, up 1.2%
  • Portfolio weighted average cap rate firmed 30 basis points to 6.90%
  • Net tangible assets up 11% (16c) to $1.67/unit since June; capital-raising at premium to NTA the key driver of the uplift
  • $A63 million of value-adding initiatives underway on existing properties
  • 2 Australian medical office buildings acquired for $A55 million, adding geographic & tenant diversification.
  • Weighted average term to lease expiry 17.6 years, occupancy levels at 99%, rent review growth 1.2%
  • A second-quarter cash distribution of 2.125c/unit will be paid to investors on 23 March.

Management company chief executive David Carr said the trust had successfully advanced its scale & diversification strategy: “Following the strongly supported $160 million capital raising in July, we completed acquisitions of 2 quality medical office buildings and a number of strategic sites around existing core assets. This diversification & flexibility for growth is an important part of Vital’s plan as we continue with our very successful brownfield development programme, working closely with both existing & potential operating partners.

“Vital is in a strong capital & portfolio position. Its sustainable distribution, coupled with a conservative payout ratio, means we are well placed to execute on our embedded strategy, including long-term value creation. Our activities continue to be validated through independent property valuations, strong total unitholder returns & market-leading unit price premium to NTA.

“Undeniable population, ageing & wider healthcare demand trends continue to support our robust investment thesis. We retain a positive outlook and we remain excited about a range of potential opportunities over the remainder of 2017.”

Link:
Vital Healthcare Property Trust

Attribution: Company release.

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Vital buys western Sydney medical centre

The Vital Healthcare Property Trust has gone unconditional on the $A30.7 million acquisition of the Mons Rd Medical Centre in Westmead, one suburb out from Parramatta in western Sydney.

The 4-level medical office building, completed in 2010, is multi-tenanted, adjacent to Ramsay Health Care’s Westmead Private Hospital and sits in the Westmead medical precinct, which Vital said was considered Australia’s largest health services precinct. It also contains the Westmead Public, Westmead Children’s & Cumberland Public Hospitals.

Vital chief executive David Carr said on Friday the trust was acquiring the medical centre on a weighted average lease expiry of 5.9 years, above its current medical office building portfolio’s 5.6 years. Overall, Vital’s portfolio weighted average lease expiry post-acquisition will be 17.8 years. The acquisition represents an initial yield of 6.7%. Settlement is expected this week.

Attribution: Company release.

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Vital has strong year & capacity to grow

Vital Healthcare Property Trust increased net profit after tax by 21.4% in the June year to $117.2 million ($96.5 million last year) and has substantial capacity for further acquisitions & redevelopment.

Management company chair Graeme Horsley said yesterday net tangible assets increased 18.9% to $1.51/unit and the portfolio weighted average lease expiry was 18.4 years. Vital will pay investors a final-quarter cash distribution of 2.125c/unit and confirmed its 2017 cash distribution guidance at 8.5c/unit.

Among highlights:

  • Gross rental income rose 15.7% to $70.4 million
  • Pretax operating profit rose 9.9% to $53.3 million
  • Net distributable income rose 10.9% to $40.2 million
  • The $101.9 million revaluation gain increased carrying book value by 12.2% to $951.9 million
  • The portfolio weighted average cap rate firmed 80 basis points to 7.2%

The company announced $A83 million of brownfield development projects & $A20 million of targeted strategic acquisitions during the year, acquired 4 Australian residential aged-care properties for $A41 million on an 8.0% initial yield and, post-balance date, raised $160 million of capital and settled its purchase of the Boulcott Private Hospital in Wellington for $31.7 million.

Management company chief executive David Carr said gross rental income increased 15.7%, driven principally by development rents. After property expenses, net property income rose 14.9%.

Finance expenses rose 25% to $15.2 million, reflecting higher overall debt levels. Vital renewed its bank facility in December.

Mr Carr said the Australian portfolio delivered 90% of the increased return, 55% of that attributable to assets which had been redeveloped.

Vital’s loan:value ratio (LVR) was 36.3% (32.9%). Although Vital had a higher drawn debt position at year-end, Mr Carr said the LVR remained relatively stable due to the strong portfolio revaluation gains. Following the capital-raising & Boulcott settlement, the ratio has fallen to 21%: “This provides about $300 million of balance sheet capacity at a 40% LVR,” Mr Carr said.

Attribution: Company release.

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Vital rights offer 87% subscribed

Vital Healthcare Property Trust’s $160 million rights offer closed on Tuesday 87% subscribed. The balance of $20 million has been allocated to the underwriter, Forsyth Barr Group Ltd.

Management company chief executive David Carr said when the 2-for-9 pro rata renounceable rights offer was announced in June that NorthWest Healthcare Properties Real Estate Investment Trust, controlled by Toronto investor Paul Dalla Lana, would take up its entitlement of just under 25%, and directors of the management company, which Mr Dalla Lana also owns, would also take up all their rights – a total $39.3 million.

The new units will be allotted & begin trading on the NZX main board next Monday, 25 July.

Vital will use the money for development, acquisition & growth opportunities.

Attribution: Company release.

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Propbd on Q M4July16 – New lease plus Boulcott settlement for Vital, Hellaby completes TBS buy, Augusta payout up after losing PIE status

Vital gets new lease at Kensington and settles on Boulcott
Hellaby completes TBS acquisition
Augusta to lift distribution, confirms loss of PIE status

Vital gets new lease at Kensington and settles on Boulcott

Vital Healthcare Property Trust has secured a 30-year lease at Kensington Hospital in Whangarei, and settled its acquisition of Boulcott Private Hospital in Lower Hutt.

Vital management company chief executive David Carr said on Friday Kensington Hospital Ltd had signed a new 30-year lease, including annual CPI reviews & periodic reviews to market.

The 2-level private hospital has 3 theatres & 19 beds, and includes an adjoining primary care facility.

Vital announced the conditional acquisition of Boulcott Private Hospital in December. It now has regulatory approvals and has settled the acquisition for $30.7 million on a 22-year lease to ASX-listed Pulse Health Group Ltd.

Mr Carr said: “Once we factor in the new 30-year lease at Kensington, the 22-year lease at Boulcott and the previously announced 10-year lease extension at Epworth Eastern Hospital in Melbourne, Vital’s weighted average lease term to expiry improves to about 18.2 years. On average, Vital now has about 1.8% of total income expiring annually over the next 10 years, with the largest single expiry over the same period representing about 2.2%.”

Hellaby completes TBS acquisition

Hellaby Holdings Ltd has completed its $45 million acquisition of construction services & asset maintenance company TBS Group Ltd, announced in June as a conditional agreement.

Hellaby chief executive & managing director Alan Clarke said the consideration was $40.5 million in cash, $4.5 million in shares plus an earn-out payment of up to $6 million dependent on achievement of 12-month earnings targets.

TBS was generating annualised revenues of about $85 million and was expected to add about $8 million in annualised ebit to Hellaby’s resource services group in the 2017 financial year.

It provides key maintenance services to a wide range of New Zealand clients in the oil & gas, agricultural, construction & power generator markets.

Augusta to lift distribution, confirms loss of PIE status

Augusta Capital Ltd said on Friday it expects its annualised distribution level to increase from 5c to 5.5c/share. The fully imputed first interim quarterly dividend for the financial year should be declared this month.

Managing director Mark Francis also confirmed that the loss of PIE (portfolio investment entity) status as a result of the continuing success & growth in value of its funds management business was effective from 1 July.

Attribution: Company releases.

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Vital’s manager lifts stake in similar ASX-listed trust

The Canadian holder of a 24.4% stake in NZX-listed Vital Healthcare Property Trust, and owner of the trust’s manager, said yesterday it would lift its stake in an unrelated but similar ASX-listed trust to 19.9%.

NorthWest Healthcare Properties Real Estate Investment Trust, listed on the Toronto Stock Exchange, entered into a put-&-call option arrangement in April to buy 7.1% of Generation Healthcare Real Estate Investment Trust and agreed yesterday to increase its stake and buy the trust’s manager.

Vital, which has 81% of its assets in Australia, announced a $160 million 2-for-9 pro rata renounceable rights offer on 21 June. Its management company chief executive, David Carr, said yesterday NorthWest’s Generation transactions weren’t connected to Vital’s rights offer: “There is no agreement, arrangement or understanding between Vital & NorthWest Healthcare relating to Generation units or Generation,” he said.

Rights trading opened today.

Earlier story:

22 June 2016: Vital Healthcare to raise $160 million

Attribution: Company release.

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Vital Healthcare to raise $160 million

Vital Healthcare Property Trust announced a rights issue yesterday to raise $160 million for continued expansion.

The 2-for-9 pro rata renounceable rights offer has an issue price of $2.08/unit, reflecting a 5.2% discount to the theoretical ex rights price of $2.195/unit.

Management company chief executive David Carr said NorthWest Healthcare Properties Real Estate Investment Trust, controlled by Toronto investor Paul Dalla Lana, would take up its entitlement of just under 25%, and directors of the management company, which Mr Dalla Lana also owns, would also take up all their rights – a total $39.3 million. Forsyth Barr Group Limited has underwritten the balance of $120.6 million.

Mr Carr said: “Over the last 5 years Vital has consistently delivered strong operational, financial & portfolio results for investors. We have executed on the board’s scale & diversification strategy to support operator growth & new acquisition initiatives. Following the recently announced pipeline of new value-add projects & acquisition opportunities, and supported by a strong unit price, the board now considers it appropriate to seek further equity in this next exciting phase of growth.

“We have experienced an extremely successful period of growth and cemented a track record of being market-leading long-term managers & investors in healthcare real estate. Having established & strengthened key operator partnerships across the sector, and supported by strong fundamentals, we will continue with our scale & diversification strategy, delivering sustainable returns to investors.”

The new units will rank equally with existing units on issue and are eligible for the final quarter distribution for the June 2016 financial year, expected to be paid in September.

Mr Carr said the funds raised through the offer would initially be used to reduce Vital’s bank debt, enabling it to continue to pursue development, acquisition & growth opportunities, and for general corporate purposes.

Attribution: Company release.

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Vital gets 12.1% lift from year’s revaluations

Revaluations at December & June have lifted the value of Vital Healthcare Property Trust’s portfolio by $55.6 million (6.2%) above book value for the second half and $100.7 million (12.1%) for the full year. The latest revaluation is unaudited and is also subject to the $A exchange rate.

Management company chief executive David Carr said yesterday the overall carrying value of Vital’s investment property portfolio was forecast to be about $962 million as at 30 June.

He said the weighted average market capitalisation rate for the 12 months firmed 80 basis points to 7.2% – 90 basis points in Australia to 7.2%, 60 basis points in New Zealand to 6.9%: “Underpinned by the successful development programme, the Australian portfolio was the key driver of the strong overall result, contributing about 90% of the $100.7 million total revaluation gain.

“Redevelopment, market demand & supportive transactional evidence has resulted in firming capitalisation rates for healthcare real estate. In addition to these factors & wider market trends, Vital’s portfolio benefits from market-leading operator covenants, the longest portfolio weighted average lease expiry in Australasia of 16.9 years, consistent rent growth and occupancy levels that have been maintained at close to 100% for several years.”

Mr Carr said the valuations, by 7 independent valuers, were expected to improve Vital’s net asset backing by about 16c/unit for the June half-year. The trust will release its annual result on 11 August.

Attribution: Company release.

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