Vital Healthcare Property Trust said today it’s signed a contract with Hawkins Construction Ltd for the first stage of a planned 3-stage redevelopment of Wakefield Hospital in Wellington.
This follows a formal tender process involving 3 qualified parties. Vital Healthcare’s manager, NorthWest Healthcare Properties Management Ltd, has an experienced development team which will manage the project in conjunction with Vital’s hospital operating partner, Acurity Health Group Ltd.
Acurity chief executive Dr Jonathan Coleman said: “The new Wakefield hospital will offer patients from central New Zealand access to some of the most advanced medical services & treatment in the country, showcasing the latest medical technologies. This will include up to 64 single beds, 8 large operating theatres including cardiac & endoscopy, consulting suites & a full range of specialist services on the existing site in the city’s Newtown area.”
Design has been underway since Vital bought the hospital as part of the Acurity portfolio in December 2017. Construction has been sequenced to minimise disruption to existing operations, allowing services to be maintained during the redevelopment period.
The $37 million first stage is a new building for medical specialist consulting space, a full radiology unit and new administration & front-of-house areas. As previously announced, the building will incorporate a base isolated design to reduce the potential for critical damage during an earthquake and increasing the probability that services will continue to be provided following a material seismic event. Practical completion is expected in the first quarter of 2021.
Vital has lifted its projected investment by $10 million to $98 million to cater for changes in scope. The rentalisation rate has been set at 6.3%, in line with the contracted linkage to the New Zealand 10-year government bond yield. This excludes $3 million of non-rentalisable contribution to the base isolation component. At the time of purchase, Vital and Acurity entered into a 30-year lease with annual rental adjustments of 1.5 times the New Zealand CPI, capped at 3%/year.
Vital’s interim manager, Miles Wentworth, said the trust had undrawn debt facilities to finance development at prevailing rates, which would deliver accretive earnings growth beginning in the 2020 financial year.
“This project will further enhance Wellington’s pre-eminent private hospital, and, on a 30-year lease term to a quality healthcare operator, will deliver an attractive risk-adjusted return to Vital unitholders.”
14 January 2019: Vital Healthcare updates on developments at 6 hospitals
4 December 2017: Vital Healthcare confirms 3 hospital acquisitions & development programme
12 May 2017: Vital enters asset & redevelopment partnership with Acurity
Attribution: Trust release.