Vital Healthcare posts 21% gain in full-year profit on rental growth, revaluation

Thursday 11th August 2016

Vital Healthcare Property Trust, which raised $160 million last month to help fund its growth strategy, reported a 21 percent gain in full-year profit as rental income rose and it recognised a gain in the value of its portfolio.

Profit rose to $117 million in the year ended June 30, from $96.5 million a year earlier, the Auckland-based hospital and healthcare property developer and investor said in a statement. Net property income rose to $68 million from $59 million and the trust recognised a $102 million revaluation gain on investment property, following an $84 million gain a year earlier.

Vital raised funds in a rights offer last month to repay debt and support its push for more scale and diversification. Today it flagged A$83 million of new brownfield development projects across its Australian private hospital portfolio and said it was targeting A$20 million of strategic acquisitions. Following the latest portfolio revaluation, the trust's investment properties are now valued at about $952 million.

"Brownfield development activity over the last few years has been transformational in delivering significant financial and portfolio outcomes for investors," said Graeme Horsley, chairman of the trust's manager, Vital Healthcare Management. "The long-term characteristics of the healthcare sector and strong real estate fundamentals continue to be drivers of the portfolio revaluation gains achieved in 2016."

The trust will pay a final quarter cash distribution of 2.125 cents a unit, bringing payments for the year to 8.2 cents. It affirmed guidance for the same sized payment in 2017. Distributable income rose about 11 percent to $40.2 million in the latest year.

Finance expenses rose 25 percent to $15.2 million, which the trust said reflected higher overall debt levels over the year compared to the prior period. The loan-to-value ratio rose to 36.3 percent at June 30, from 32.9 percent a year earlier.

Other expenses rose by $4 million to $15 million, including management and incentive fees of $12.5 million. It said the incentive fee of $6.3 million, to be paid via the issuance of more units to the manager, was based on the average growth in the value of the trust’s assets over the past three years.

The trust's weighted average lease expiry is 18.4 years.

The units last traded at $2.26 and have climbed 22 percent this year.

BusinessDesk.co.nz

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