NZX-listed Vital Healthcare Property Trust has doubled its loan to its manager to support the acquisition of an increased stake in Australian listed company Healthscope Ltd.
Vital had paid $A41 million to support the investment in Healthscope, and this week upped it to $A81 million.
Vital’s manager, NorthWest Healthcare Properties Management Ltd, is part of a group of entities controlled by Paul Dalla Lana of Toronto, Canada, which invest in & manage properties & businesses in the healthcare sector. The Northwest group also owns 24% of Vital’s units.
Vital chief executive David Carr reiterated in a release yesterday that “an acquisition of Healthscope’s underlying hospital-related real estate is of interest to NorthWest & Vital, in line with their long-term strategy to invest in healthcare real estate assets in the Australasian market”.
He added: “Consistent with their conflicts policy, NorthWest & Vital currently intend to pursue any potential Healthscope real estate acquisition jointly, with scope to introduce other capital partners as appropriate.”
The immediate owner of Vital’s manager, NorthWest Healthcare Properties REIT, announced in May it had acquired a 10% interest in Healthscope at $A2.39/share by way of a derivative contract with Deutsche Bank AG’s Sydney branch. On 20 November, NorthWest said it had bought another 1% on market and on 30 November it amended the derivative contract to increase its interest in voting shares to up to 13.41%, acquired at an average $A2.360062/share.
As an extension of its loan arrangement with NorthWest, Vital agreed to lend the further $A40 million to NorthWest to reflect “Vital’s proportionate contribution to the funding required to support the acquisition of the 13.41% position. The loan is repayable in 12 months, unless the parties agree to a shorter timeframe. The loan continues to be on arm’s-length terms and interest is payable by NorthWest.”
Healthscope owns 43 private hospitals in Australia (down from 45 when Northwest bought in) and pathology operations in New Zealand, and has been a takeover target for months, after its sell-off of $A300 million of assets & 19% drop in net profit to $A89 million for the year to June.
In late November, Healthscope granted exclusive due diligence to Brookfield Capital Partners Ltd of Toronto, making its second bid to take over Healthscope at a total value of $A2.585/share, or about $A4.5 billion.
Through all the takeover activity, Healthscope has Brookfield’s agreement for it to continue working on establishing an unlisted property trust to hold most of its hospital assets and lease them back to Healthscope, provided it doesn’t enter a binding divestment agreement in the meantime. Healthscope added that “a new co-investor (unnamed) would be introduced to hold an interest of 49%” in the new trust.
25 November 2018: Vital Healthcare management fees up for review, new action at Healthscope
23 November 2018: Northwest increases Healthscope stake to 11.1%
9 May 2018: Vital Healthcare’s parent makes new Australian investment
Attribution: Company releases.