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Vital Healthcare 1H distributable income rises 87% on rental returns from portfolio

Thursday 23rd February 2017

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Vital Healthcare Property Trust, the Auckland-based hospital and healthcare property developer and investor, said its first-half net distributable income rose 87 percent as acquisitions and developments helped drive rental income growth.

Distributable income rose to $35.5 million in the six months ended Dec. 31, from $19 million a year earlier, the company said in a statement. Gross rental income rose 54 percent to $51.8 million including a lease termination receipt of $13.8 million. Net profit fell to $45.5 million from about $59 million in the previous year, when it had a $45 million revaluation gain compared with $13 million in the latest half.

The company raised $160 million last year and chief executive David Carr said today that it now had "a strong balance sheet with flexibility to continue to execute on our disciplined scale and diversification strategy." Its loan-to-value ratio of 24.4 percent as at Dec. 31 was "well below the bank and Trust Deed covenants of 50 percent".

"Undeniable population, ageing and wider healthcare demand trends continue to support our robust investment thesis," Carr said. "We retain a positive outlook and we remain excited about a range of potential opportunities over the remainder of 2017."

Since the capital raising last July, Vital has acquired two medical office buildings in Melbourne and Sydney for A$55 million. It also completed an A$18.3 million brownfield development South Eastern Private Hospital and Dubbo Private Hospital and currently has five development projects, for about A$63 million, underway.

It completed 33 rent reviews, amounting to about 20 percent of total income, in the first half, resulting in a 1.2 percent uplift in rental income. About 65 percent of Vital’s total income remaining subject to review to 30 June, 2017, and "we expect these reviews will contribute to continued income growth over the period," Carr said.

During the period Vital received a one-off lease termination receipt of $13.8 million as part of rent, make-good and other future obligations at its two properties located in Southport on the Gold Coast of Queensland, Australia, it said.

The company confirmed its second-quarter distribution of 2.125 cents a unit with a record date of March 9 and payment date of March 23. It affirmed its full-year distribution guidance of 8.5 cents a unit.

The units rose 0.5 percent to $2.07 and have climbed 11 percent in the past 12 months.


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