Sharechat Logo

Vital Healthcare seeks $160 mln to keep development pipeline pumping

Tuesday 21st June 2016

Text too small?

Vital Healthcare Property Trust plans to raise $160 million to pay down debt, giving it headroom to pursue a pipeline of developments on both sides of the Tasman. 

The trust plans to sell shares at $2.08 apiece in a two-for-one pro rata renounceable rights offer, manager Vital Healthcare Management said in a statement. Vital Healthcare's biggest investor and owner of the manager, NorthWest Healthcare Properties Real Estate Investment Trust, intends to take up its full entitlement worth $39.3 million, and brokerage Forsyth Barr will underwrite the balance of $120.6 million. The units fell 2.3 percent to $2.17, still a premium to the offer price, having gained 19 percent so far this year. 

The funds raised will repay bank debt, which was sitting at $283.7 million as at March 31, lowering the hospital and healthcare property developer and investor's gearing to 20.3 percent from 37.1 percent. 

Vital Healthcare has been buying properties on both sides of the Tasman and expanding those facilities to latch on to ageing demographics in Australia and New Zealand. The property investor has A$87.6 million of development projects either underway or in the pipeline, and recent acquisitions add properties worth about A$64.1 million in Australia and NZ$31.7 million in New Zealand. 

"We've done a whole lot of that brownfields and acquisition activity, so we'll put a bit more money in the pot," David Carr, chief executive of the manager, told BusinessDesk. "We've got commitments that'll push the gearing from 20 percent back to about 30 percent, and then (the funds) give us a bit more firepower to keep going with all the stuff we've been doing." 

Carr said Australia still offers the greatest opportunity given its relative size and Vital Healthcare has been expanding its team across the Tasman over the past year. 

The offer will expand the number of units on issue, but Vital Healthcare's board will continue to pay a distribution of about 8.5 cents per unit, which implies a lift in cash distributions to $36.1 million from the $29.4 million it would pay out under a smaller share register. The 8.5 cent annual payment was itself an increase from 8.1 cents. 

"The board's message is that's a sustainable distribution, and that's a very confident message," Carr said. 

The rights will be tradable on the NZX between June 28 and July 13 with the offer closing on July 19. 

Carr said institutional investors had around the $2.08 price, but they chose a renounceable rights offer to give its "very strong local retail register" the opportunity to participate in the process.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report