Toronto healthcare specialist NorthWest pays $11.5 million for Vital management, holds 19.8% of trust

Published 5 December 2011

OnePath (NZ) Ltd said today it had entered into a binding conditional agreement to sell the Vital Healthcare Property Trust’s manager, Vital Healthcare Management Ltd, to Toronto- based NorthWest Value Partners Inc for $11.5 million.

 

NorthWest first bought into Vital a month ago and will also hold 19.8% of the trust’s units. NorthWest is a private real estate investment firm which has built a $C1 billion healthcare real estate portfolio since 2003, including founding NorthWest Healthcare Properties Reit. It recently embarked on expanding its healthcare portfolio internationally, initially focusing on Australia & New Zealand, Brazil & Germany.

 

The Vital transactions come one day before the trust’s delayed annual meeting.

 

OnePath, a subsidiary of ANZ National Bank Ltd, proposed a $14 million management buyout for Vital in April. Ascot Property Management proposed a $4.5 million buyout, resisted by both OnePath and the independent directors, who’d got OnePath down to an $8 million-$6 million difference before OnePath decided to stop the internalisation process.

 

NorthWest, controlled by Paul Dalla Lana, of Toronto, built a 10.8% stake in Vital a month ago, starting with the Accident Compensation Corp’s remaining units. ACC – which campaigned mid-year to sack the ANZ National Bank Ltd managers of 2 former ING trusts, Vital and the Argosy Property Trust – cut its holding from 9.1% to 5.5% in September, selling to another ANZ National subsidiary, AUT Investments Ltd, which took its Vital stake from zero to 9%.

 

NorthWest has entered into a conditional agreement to buy AUT’s 9% at $1.20/unit, the same price it paid in November.

 

OnePath director John Body said the buyout agreement was subject to regulatory approvals, for which OnePath expected conditions to be satisfied by the end of 2011. He said NorthWest would also offer jobs to Vital’s existing management team.

 

“The agreement with NorthWest represents a good outcome for Vital unitholders as it preserves continuity of the current management, backed by the expertise of a global owner & manager of real estate assets with deep experience in the specialised healthcare property sector.”

He said NorthWest would address tomorrow’s annual meeting.

 

Vital Healthcare Management’s independent directors, Bill Thurston & Graeme Horsley, said after brief preliminary discussions with NorthWest representatives they’d formed a favourable initial view of the prospects for the trust & unitholders.

 

Mr Thurston added: “Whilst this now takes any internalisation opportunity off the table for the foreseeable future, we will still certainly engage with NorthWest to promote corporatisation as an alignment opportunity that they should consider at a future date.

 

“Certainly the independent directors expect NorthWest to continue to conclude the outstanding fee review, confirm the appointment of an Australian-based director to the board of the manager and also consider the corporatisation of the trust.”

 

Earlier stories:

20 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

26 September 2011: ANZ pays $1.83 million above market for Vital units after $2 million difference over management price

23 September 2011: ANZ halts Vital internalisation after lifting trust stake to 9%

23 September 2011: ANZ puts 9% of Vital into new subsidiary, including some of ACC’s stake

 

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Attribution: OnePath, Vital independent directors, NorthWest, story written by Bob Dey for the Bob Dey Property Report.

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