Archive | Vital Healthcare Property Trust

NorthWest signs Healthscope sale & leaseback deal, but Vital still undecided

Entities in the NorthWest Healthcare Properties group of Toronto have signed a conditional contract to buy 11 hospital property assets from hospital property assets from ASX-listed Healthscope Ltd for $A1.258 billion, but the NZX-listed member of the group, the Vital Healthcare Property Trust hasn’t signed up to participate – yet.

At the beginning of December, Vital doubled its loan to its manager to support the acquisition of an increased stake in Healthscope. Vital had paid $A41 million to support the investment, and in December upped it to $A81 million.

Vital’s board, who are actually directors of the trust manager, NorthWest Healthcare Properties Management Ltd, came under fire from dissident corporate investors at the trust’s annual meeting in December. The dissidents got majority support for 3 of their 5 proposals, which were deemed non-binding, but failed in the bid to get their nominee elected to the management company board.

On Friday, a related Toronto-listed trust, the NorthWest Healthcare Properties Real Estate Investment Trust, said it & its controlled entities had entered into a conditional contract to acquire 11 freehold hospital property assets from Healthscope as part of a sale & leaseback transaction.

The New Zealand management company’s chief executive, David Carr, who was a director for a short time last year but reverted to his purely executive role at the annual meeting, said in Vital’s Friday release: “Vital is not currently a party to the property transaction. Vital views it as potentially an attractive opportunity and has had significant discussions about its participation in the acquisition of the portfolio with NorthWest. Those discussions have not as yet resulted in any agreement. Any such participation is subject to being able to reach agreement on commercial terms and documentation with NorthWest.

“Further, any participation by Vital would be subject to compliance with its trust deed & the Financial Markets Conduct Act, including necessarily being in the best interest of unitholders & on arms’-length terms.”

Earlier stories:
14 January 2019: Vital Healthcare updates on developments at 6 hospitals
21 December 2018: Vital Healthcare Property dissidents show muscle, and their arguments may yet hold sway
6 December 2018: Vital doubles loan to NorthWest for Healthscope acquisition
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
11 October 2013: Dalla Lana lifts Vital stake to 24.11%
5 December 2011: Toronto healthcare specialist North West pays $11.5 million for Vital management, holds 19.8% of trust

Attribution: Company release.

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Vital Healthcare updates on developments at 6 hospitals

In the turbulence in the week before Vital Healthcare Property Trust’s annual meeting in December, an update by the trust manager on brownfield development & strategic acquisitions was easily set aside.

At issue at the annual meeting was the disparity between returns to investors and returns to the manager, NorthWest Healthcare Properties Management Ltd, a 100% subsidiary of the NorthWest group of Toronto headed by Paul Dalla Lana. Dissident corporate unitholders got majority support for 3 of their 5 proposals put to the annual meeting, but failed in the bid to get their nominee elected to the management company board. A review called by the board may still bring changes to at least partially satisfy the dissidents.

Meanwhile, the trust management headed by chief executive David Carr continues with a large programme of acquisitions in Australia & New Zealand, and the injection of further value through development.

Mr Carr said in the update, dated 13 December: “The programme underpins our strategy to drive long-term value-add opportunities and deliver sustainable returns to Vital investors. Development work now under way builds on property acquisitions totalling $195 million in the June 2018 year, all of which had short- to medium-term brownfield development projects planned or in progress.”

Recent milestones related to tenders to start the full redevelopment at Wakefield Hospital in Wellington, resource consent for work at Royston Hospital in Hastings, final development work at Bowen Hospital in Wellington, the acquisition of land adjacent to Ormiston Hospital at Flatbush in Auckland, further development at Maitland in New South Wales and – subject of some concern at the annual meeting over the way it’s been carried out – the first joint acquisition of a value-add development site with the NorthWest Healthcare Properties Australia REIT.

Wakefield Hospital, Newtown, Wellington: Capital commitment $88 million.

Tenders have been invited for the first stage of redevelopment. Vital Healthcare bought Wakefield Hospital, together with Royston & Bowen Hospitals, on initial 30-year lease terms as part of the strategic partnership with Acurity Health Group established in 2017.

The trust manager, NorthWest, expects to award the construction contract in early 2019. The full development programme will be delivered in stages to be completed in 2022, creating a new, high quality facility with 8 operating theatres, 42 beds, a 3000m² medical consulting building & supporting infrastructure. It will include a base-isolated design to ensure the hospital remains operational following a seismic event.

Royston Hospital, Hastings: Capital commitment $13 million. 

NorthWest has received resource consent for the development, which will expand into adjacent properties the trust owns. The development will incorporate the reconfiguration of patient admission & recovery areas, expansion of consulting space & 2 new operating theatres, one of which will be commissioned immediately. NorthWest expected to award the construction contract in December and anticipates completion of works in mid-2020.

Bowen Hospital, Crofton Downs, Wellington: Capital commitment $4 million.

Final works were under way to complete the radiation oncology facility, including new linear accelerator bunkers, by the end of December.

Ormiston Hospital, Flatbush, Auckland: Capital commitment not yet confirmed.

Vital acquired this hospital in April 2017 and bought 5500m² of vacant land next to it last September. Existing facilities include a 6-theatre, 31-bed private hospital in one of Auckland’s strongest population growth corridors. Ormiston is the only private hospital in this area, which has a population estimated at 540,000.

NorthWest has begun masterplanning for development, focusing initially on establishing a medical & healthcare precinct. Pending appropriate precommitments, development will enable the trust to establish complementary services & facilities, enhancing value and securing Ormiston as the pre-eminent private healthcare precinct in the South Auckland catchment.

Maitland Hospital, Merewether, New South Wales: Capital commitment $A3 million.

Construction of a 10-bed intensive care unit within the existing building, including the provision of chemotherapy services, is scheduled for completion in February. Maitland Hospital is a 156-bed private hospital owned by Vital & operated by Healthe Care Australia Pty Ltd (now a subsidiary of the Singapore-based Luye Medical Co Group Ltd, which in turn is part of the LuyePharma Group Ltd based in Shandong, China), specialising in surgery, acute medical, post-natal, psychiatric & rehabilitation services. NorthWest said provision of an intensive care unit would bring the hospital into line with other major tertiary-level private hospitals of similar scale in the region.

Strategic acquisition adjacent to Lyell McEwin Hospital, Adelaide, South Australia: Transaction value $A13.75million (100% interest).

Vital & NorthWest have jointly acquired a 16,700m² development site adjacent to Lyell McEwin Hospital, the third largest public hospital in metropolitan South Australia. A 2200m² retail centre on the site is fully occupied by tenants on short lease terms with relocation &/or termination rights. The acquisition provides Vital with the opportunity to develop a private healthcare precinct colocated with a major public hospital.

Earlier story:
21 December 2018: Vital Healthcare Property dissidents show muscle, and their arguments may yet hold sway

Attribution: Trust release.

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Vital Healthcare Property dissidents show muscle, and their arguments may yet hold sway

Dissident corporate unitholders in the Vital Healthcare Property Trust got majority support for 3 of their 5 proposals put to the annual meeting yesterday, but failed in the bid to get their nominee elected to the management company board.

Nevertheless, the support the trio of corporate dissidents amassed may be enough to reshape a review sought by the manager, and start the rebalancing they advocate between returns to the manager & distributions to unitholders.

Under the NZX structure for listed trusts, investors hold units in the trust but control lies with the manager. At Vital, the manager is NorthWest HealthcareProperties Management Ltd, a 100% subsidiary of the NorthWest group of Toronto headed by Paul Dalla Lana. Although the annual meeting was of unitholders in the trust, the board they vote directors to is the board of the manager.

Dissidents tried to get a director elected yesterday, and put 5 proposals which the board declared would be non-binding.

The broad outcomes:

  • Management board candidate Graham Stuart, appointed to the board in November, was re-elected
  • The dissidents wanted the board enlarged to 6 members, the manager & current board resisted. Dissidents’ candidate Paul Mead lost the vote to Mr Stuart, and the dissidents’ proposal to enlarge the board was also defeated
  • Although the dissidents’ 5 proposals were put as part of the business of the meeting, the board had decreed that they’d be non-binding and recommended unitholders vote against the resolutions
  • NorthWest scored marginal support for the first 2 relating to unilateral removal of directors & unilaterally altering the management fee. The third, to realign returns to manager & unitholders, was won 50.5% v 49.5% by the dissidents. The fourth & fifth, to enlarge the board and amend the conflicts of interest policy & board charter, gathered more opposition and were defeated.

The meeting was unusual. The board, having started a review of how Vital’s run and wanting to continue with it, had declared its position in the meeting documents but didn’t push its case, except for management company chair (and thereby trust chair) Claire Higgins saying directors wanted to get on with the review in the way they’d planned it.

Ms Higgins, a Vital/NorthWest director since 2012, succeeded Graeme Horsley as chair in May. After the meeting, but before the votes had been counted, Ms Higgins told me: “I don’t like to get into the trenches. I like to work with people. We’ve got to get NorthWest to agree to the changes, things we brought as independent directors to them.”

She thought NorthWest of Toronto would be receptive to the appointment of another independent director but, as with reviewing policies, “you have to do it in the right way”.

NorthWest’s vote questioned

The ability of NorthWest of Toronto to vote at all was called into question at the meeting because of allegations of conflict, but Ms Higgins said that although that question of law hadn’t been fully resolved, NorthWest’s units would be voted.

Excluding the Toronto holding of 110.8 million units (just under 25% of the total) would have meant NorthWest’s candidate for the board would have been defeated and all 5 proposals put by the dissident corporates would have been carried, though they would still have been non-binding.

The question of conflict has arisen often throughout the 30-odd years that externally managed trusts like Vital have been listed on the NZX, and most of them have changed their ownership & management models.

Vital, and just one other NZX-listed property trust, Goodman, have maintained the model of a trust managed by an external manager, both with large cornerstone unitholdings by the manager’s parent. Goodman parent, trust & unitholders have forged a good relationship in which the Australian parent has at times partnered with the NZ trust, and their transactions have been clearly visible.

The Canadian controlling interest in Vital & its manager has expanded the business exponentially from what, in its first couple of years as the Calan Healthcare Properties Trust, was a rickety, inadequately capitalised listed entity, and under ING and then ANZ Bank control remained a minor entity.

Ironic dissidence

But dissident unitholders at Vital’s annual meeting pointed to the widening discrepancy between returns to the manager and returns to unitholders.

That was ironic, because one of the leading trio of dissidents, ANZ Bank funds management, is a successor to OnePath (NZ) Ltd, the business that sold the Vital management contract to NorthWest in 2011.

And more ironic, because the entity that made that handover possible was another 2018 dissident, the Accident Compensation Corp, which had been calling for Vital’s ANZ-owned manager to be sacked in 2011 but then sold nearly half its 9.1% stake to an ANZ subsidiary.

The third of the corporate dissidents yesterday was Mint Asset Management Ltd.

The director vote

Re-election of Graham Stuart versus election of dissidents’ candidate Paul Mead as an independent director: Mr Stuart 184,312,438 (67.4%) votes in his favour, which exceeded the 89,023,333 (32.6%) votes cast in favour of Mr Mead. As they were contesting one board seat, Mr Stuart was elected.

Ms Higgins, Andy Evans & Mr Stuart are considered to be independent directors under the NZX listing rules. Chief executive David Carr was appointed to the board on 1 May and has been an executive director. He stood down from the board yesterday, reducing the board from a temporary 6 members to 5. The other 2 are Mr Dalla Lana & Bernard Crotty, of NorthWest in Toronto.

Although the argument looked at times a “them versus us” dispute, the wheels of change had been turning.

The manager confirmed in the meeting notice that it had already established a process to deal with the substance of the dissidents’ first 3 proposals, including a board-led review of management fees in the first quarter of 2019, with the manager’s rights in regard to election or removal of independent directors being suspended for the duration of that review.

Non-binding proposals passed: 
Proposal 1, relating to the election or removal of independent directors: 
For: 137,113,960 (53.9%) Against: 117,412,541 (46.1%) 
Proposal 2, relating to management fees:
For: 137,904,997 (54.2%) Against: 116,647,180 (45.8%) 
Proposal 3, also relating to management fees:
For: 128,475,755 (50.5%) Against: 126,067,548 (49.5%)

Non-binding proposals defeated: 
Proposal 4, relating to board composition:
For: 117,271,395 (46.1%) Against: 137,086,559 (53.9%) 
Proposal 5, relating to policies & procedures:
For: 117,437,126 (46.6%) Against: 134,721,703 (53.4%)

Background

In December 2011, the group Mr Dalla Lana controls, Toronto-based NorthWest Value Partners Inc, bought Vital’s management company from ANZ National Bank Ltd subsidiary OnePath (NZ) Ltd and held 19.66% of Vital’s units until April 2013, when he declared his intention to acquire up to 15.35 million units.

That proposal came 3 weeks after Vital obtained an Inland Revenue binding ruling which increased the limit a large unitholder could go to before the trust’s PIE (portfolio investment entity) status would be affected. Before that ruling, Vital management understood no unitholder could hold more than 20% of the units in the trust if it were to maintain its PIE status. The ruling lifted the limit to 25%.

According to Vital’s 2018 annual report, NorthWest held just under 106 million (24.26%) of Vital’s 437 million units at the 30 June balance date. Subsequent payments & acquisitions have lifted that stake to 110,823,292 units, or 24.91% of the trust.

In addition, NorthWest of Toronto owns Vital’s manager, renamed NorthWest Healthcare Properties Management Ltd in February.

Earlier stories:
6 December 2018: Vital doubles loan to NorthWest for Healthscope acquisition
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

28 February 2018: Vital Healthcare gets revaluation lift
4 December 2017: Vital Healthcare confirms 3 hospital acquisitions & development programme
31 January 2015: Ownership of Vital Healthcare manager moves to Canadian reit
11 October 2013: Dalla Lana lifts Vital stake to 24.11%
5 December 2011: Toronto healthcare specialist North West pays $11.5 million for Vital management, holds 19.8% of trust
21 November 2011: Vital unitholders get a pointless vote while major issues stay up in air
4 November 2011: Canadian investor Dalla Lana buys ACC out of Vital Healthcare
23 September 2011: ANZ halts Vital internalisation after lifting trust stake to 9%
27 April 2011: $14 million buyout price on Vital management contract

Attribution: Annual meeting, annual report, NZX documents.

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Vital doubles loan to NorthWest for Healthscope acquisition

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.

Earlier stories:
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.

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Vital Healthcare management fees up for review, new action at Healthscope

Vital Healthcare Property Trust’s manager, NorthWest Healthcare Properties Management Ltd, said on Friday it planned to review its management fees in the first quarter of 2019.

Northwest & its ultimate shareholder, NWI Healthcare Properties LP, are controlled by Paul Dalla Lana of Toronto. Northwest also holds 24% of Vital’s units.

Another arm of the group, NorthWest Healthcare Properties REIT, increased the stake it bought in May in ASX-listed hospital owner Healthscope Ltd, as the takeover & breakup of Healthscope looked more certain.

On the management fees, Northwest committed not to exercise certain rights set out in Vital’s trust deed for the duration of the fee review, with a 31 March end date, including:

  • Their rights relating to the removal of independent directors, and
  • Their right to increase Northwest’s fees above current levels.

Vital chief executive David Carr, who’s also a management company director, said in yesterday’s release the full board would lead the fee review, with input to be sought from a range of unitholders.

“The decision to undertake a fee review follows positive & constructive discussions with a number of unitholders during the course of this year. The review will be conducted in the context of Vital’s existing structure as an externally managed listed trust, and its strategic & operational requirements.

“There can be no assurance of any changes to Vital’s fee structure or the nature of any such changes arising out of the review process.”

Vital will hold its annual meeting on Thursday 20 December.

The Healthscope scenario

In separate action this week, NorthWest Healthcare Properties REIT, of Canada, increased its stake in Australian listed hospital operator & takeover target Healthscope from 10% to 11.1%.

Healthscope, which owns 43 private hospitals in Australia (down from 45 when Northwest bought in) and pathology operations in New Zealand, 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.

This week Healthscope turned down a quest for due diligence from private equity firm BGH Capital Pty Ltd, heading a consortium comprising industry fund AustralianSuper, Carob Investment Pte Ltd of Singapore & 2 Canadian super funds, the Canada Pension Plan Investment Board & Ontario Teachers’ Pension Plan Board. Instead, Healthscope granted exclusive due diligence to Brookfield Capital Partners Ltd of Toronto, making its second bid.

The BGH proposal is worth $A4.1 billion at an indicative $A2.36 cash/share. Brookfield made a bid in August at $A2.50/share and raised it this week to total value of $A2.585/share. Norges Bank built a 5.1% stake in Healthscope over the last 3 months in a range of $A1.79-2.38/share.

Mr Dalla Lana said Northwest & the Vital trust were interested in jointly acquiring Healthscope’s underlying hospital-related real estate, in line with their long-term strategy to invest in healthcare real estate assets in Australia & New Zealand, and with scope to introduce other capital partners.

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.

Earlier story:
23  November 2018: Northwest increases Healthscope stake to 11.1%
9 May 2018: Vital Healthcare’s parent makes new Australian investment

Attribution: Northwest, Vital & Healthscope releases.

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Northwest increases Healthscope stake to 11.1%

The Canadian real estate investment trust which controls the Vital Healthcare Property Trust & its manager has increased its stake in Australian listed hospital operator Healthscope Ltd to 11.1%.

NorthWest Healthcare Properties REIT said on Tuesday it had added 1% of Healthscope’s voting shares, through onmarket buying, to the 10.1% it acquired in May under a forward derivative contract with Deutsche Bank AG’s Sydney branch.

Healthscope has a portfolio of 43 hospitals concentrated in large metropolitan centres throughout Australia.

Northwest chair Paul Dalla Lana & chief executive John Frey said Northwest & the Vital trust were interested in jointly acquiring Healthscope’s underlying hospital-related real estate, in line with their long-term strategy to invest in healthcare real estate assets in Australia & New Zealand, and with scope to introduce other capital partners.

NorthWest is an unincorporated, open-ended Canadian real estate investment trust which owns New Zealand company NorthWest Healthcare Properties Management Ltd, manager of the Vital Healthcare Property Trust, and holds 24% of Vital’s units.

Attribution: Company release.

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Vital Healthcare’s parent makes new Australian investment

The owner of the Vital Healthcare Property Trust’s manager, NorthWest Healthcare Properties REIT, has acquired a 10% interest in Australian private hospital operator Healthscope Ltd.

NorthWest, based in Toronto, Canada, said yesterday it had bought the stake for $A2.39/share by way of a derivative with Deutsche Bank AG’s Sydney branch.

Healthscope has a portfolio of 45 hospitals concentrated in large metropolitan centres throughout Australia. NorthWest said in a release: “An acquisition of Healthscope’s underlying hospital-related real estate is of interest to NorthWest & Vital Healthcare in line with their long-term strategy to invest in healthcare real estate assets in the Australasian market. NorthWest & Vital currently intend to pursue any potential Healthscope real estate acquisition jointly, with scope to introduce other capital partners as appropriate.”

The NorthWest group has interests in a diversified portfolio of 149 properties in Canada, Brazil, Germany, Australia & New Zealand.

Attribution: Company release.

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Vital Healthcare gets revaluation lift

Vital Healthcare Property Trust increased net profit after tax by 16.2% to $52.9 million ($45.5 million) for the December half, although revenue from ordinary activities fell 15.1% to $43.2 million ($50.8 million).

Revaluations made the difference, up from $13.1 million a year ago to $42.8 million.

Basic & diluted earnings/unit were 12.22c (10.97c).

Highlights:

  • Portfolio lease term increased to 18.6 years (from 17.7 years at 30 June 2017), while retaining occupancy at 99.3%
  • Same property net operating income increased 3.5%
  • Net distributable income of $22.8 million (5.26c/unit)
  • Adjusted funds from operations/unit (AFFO/unit) 5.40c, generating a payout ratio of 79%
  • Cap rate firmed to 5.85% (from 6.03% at 30 June 2017), generating an interim gain of $42.8 million
  • NTA/unit of $2.19, up 7% from 30 June 2017
  • Finance costs declined 57basis points to 4.09%, gearing at 36.8%
  • Acquisition of Acurity NZ hospital portfolio, Eden Rehabilitation Hospital & The Hills Clinic in Australia for $NZ187 million
  • Development pipeline (6 projects) of $144 million over the next 4 years
  • Management integration in Australia & New Zealand further strengthening the platform.

Link:
Vital financial reports

Attribution: Company release.

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Vital Healthcare confirms 3 hospital acquisitions & development programme

Vital Healthcare Property Trust has received Overseas Investment Office approval enabling it to commit unconditionally to the purchase of 3 hospitals from Acurity Health Group Ltd and up to $106.5 million to brownfield development over the next 4 years to expand the hospitals.

Vital agreed in May to buy the land & buildings at Wakefield & Bowen Hospitals in Wellington and the Royston Hospital in Hastings for $54 million.

Wakefield Hospital, Newtown

In addition to the acquisition, Vital has also committed to the full redevelopment of Wakefield Private Hospital alongside Acurity, subject to regulatory consents.

The completed development will include 8 operating theatres, 42 beds, a 3000m² medical consulting building, over 260 parking spaces, supporting infrastructure and patient & administration services. Expansion capacity will be built into the design to allow for growth as required.

Vital management company chief executive David Carr said on Friday: “The redeveloped Wakefield will be completed in stages to minimise disruption to existing operations. Completion of the works will provide a sector-leading, modern & functional facility for Acurity to deliver exceptional quality healthcare to patients for generations to come.”

The total forecast capital commitment is up to $82 million. The works are planned to start in 2018 and be completed in mid-2021.

Bowen Hospital, Crofton Downs

Vital also confirmed that, subject to regulatory consents, it has committed to the development of necessary infrastructure for radiation oncology services to be commissioned at Bowen Hospital.

The works will include the construction of 2 radiation oncology bunkers, initially with one linear accelerator but capacity to increase to 2 as demand increases.

Mr Carr said this was the first private radiation oncology service for patients in Wellington. The service is operated by Icon Cancer Care, Australia’s largest private provider of cancer care, in partnership with Acurity. He said radiation oncology services were a logical expansion following the recent commencement of private medical oncology services at Bowen by the Icon/Acurity partnership.

The total forecast capital commitment is up to $11.5 million. The works are planned to start in the first half of 2018 and are forecast to take about 9 months.

Royston Hospital, Hastings

Vital has committed to an immediate development project at Royston, alongside Acurity as hospital operator.

Subject to resource consent, the development will see an expansion into adjacent properties held for development and will incorporate an additional 2 operating theatres, reconfiguration of patient admission & recovery areas, and expansion of medical imaging.

Mr Carr said: “Our agreement with Acurity to enter into a 30-year lease and commitment to an immediate development project at Royston affirms our combined vision to enhance Royston’s long-held reputation as a quality private hospital serving the Hawke’s Bay region.”

The total forecast capital commitment is up to $13 million. The project is expected to start in late 2018, subject to regulatory consents, and is forecast to take about 12 months.

Vital is scheduled to settle the acquisitions this month.  All development capital expenditure is forecast to be rentalised at a yield of about 7%.

Earlier story:
12 May 2017: Vital enters asset & redevelopment partnership with Acurity

Attribution: Company release.

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Vital settles Hills purchase

Vital Healthcare Property Trust settled its $A30.3 million purchase of a private mental health hospital in Sydney, The Hills Clinic, on 31 July.

The Hills will be run on a 30-year lease by Healthe Care Australia Pty Ltd, Australia’s third largest corporate private hospital operator and pan-Asian healthcare services group, now owned by the Singapore-based Luye Medical Group Pte Ltd.

Vital chief executive David Carr said when he announced the acquisition in June: “The Hills Clinic is Vital’s fifth mental health hospital in Australia and its first in New South Wales and directly supports our scale & diversification strategy. The Hills site has expansion capability, with potential for an additional 24 beds, which fits nicely with Vital’s philosophy of supporting its operating partners as population growth & wider demand for mental health services increases over time”.

Earlier story:
13 June 2017: Vital buys another Sydney hospital

Attribution: Company release.

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