Vital Healthcare Property Trust’s manager, Northwest Healthcare Properties Management Ltd, will put its proposal for a foreign exempt listing on the Australian Securities Exchange to unitholders at a fully virtual – online – meeting tomorrow.
The resolutions require 75% approval by unitholders entitled to vote and who vote. NorthWest is unable to vote its holding of 24.9% of the units.
The management company said in its notice of meeting: “If the required level of support is not received, Vital will not be listed on the ASX and Vital’s access to capital going forward will be largely restricted to the New Zealand market. This will limit Vital’s ability to grow, impact Vital’s cost of capital and hinder Vital’s ability to be competitive for future opportunities in an increasingly competitive sector.”
The proposal is to separate Vital’s New Zealand & Australian properties into separate but stapled trusts, “primarily to remove inefficiencies for investors outside New Zealand. Removing these inefficiencies is required to facilitate a foreign exempt listing on the ASX.”
The management company outlined its view in a letter to unitholders on 28 February. Its board said it believed that, as a result of these changes, the trust would gain:
- an increase in distributions for all unitholders, including adopting a distribution policy with a target payout ratio of 95-100% of adjusted funds from operations. As an example, a New Zealand unitholder with a 30% marginal tax rate is expected to receive a 10% increase in distributions after tax
- an expected increase in the value & liquidity of Vital’s units over time, further aided by the potential for index inclusion in the ASX300 index
- access to a broader range of capital sources at an efficient cost, and
- a more competitive position for acquisitions & development projects for future earnings growth.
In an independent advisor’s report, Grant Samuel concluded that the proposal was “in the best interests of all unitholders when it is analysed in combination with the capital management initiatives & potential value uplift from an increase in the unit price”.
The management company said a foreign exempt listing on the ASX would bring Vital in line with over 50% of other NZX50-listed entities and support Vital to continue to grow its earnings.
18 December 2019: Vital Healthcare works towards ASX listing vote by March
Attribution: Northwest release.