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Vital Healthcare shareholders approve capital raising

Wednesday 24th November 2010

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Shareholders of Vital Healthcare Property Trust have approved plans to raise funds to acquire properties in Australia and were told the trust plans to amend its fee structure.

The health-care property investor formerly known as ING Medical Property Trust plans to raise $150.9 million in a one-for-one rights issue at $1.05 apiece. The shares traded unchanged today at $1.10. Funds raised will help meet the A$164.5 million cost of acquiring 12 hospitals and medical properties from Essential Healthcare Trust, lifting the value of Vital’s portfolio by 70% to $513.8 million.

The trust's manager, Vital Healthcare Management, also told shareholders at their annual meeting that it is proposing to amend its fee following "feedback from the market." If approved, the base fee would reduce to 0.6% per annum of gross assets from 0.75%, the performance fee would be based on total shareholder returns not just asset revaluations and the manager could charge a property management fee of up to 4% of the gross income of each property.

Last month, the manager's owner ANZ New Zealand said it had received approaches from parties interested in buying the management rights to Vital. Chairman Bill Thurston told shareholders today that no announcement is likely this year and that ANZ hasn't yet decided whether to exit the business.

Thurston said the outlook for 2011 and beyond "may continue to be challenging" though the healthcare market remains relatively resilient, especially in Australia, where there has been a marginal increase in people taking out health insurance. By contrast, New Zealanders taking private health insurance fell in the year ended September 30.

Higher credit costs would erode the trust’s 2011 cash distribution to a range of 8 cents to 8.2 cents, , down from the 8.5 cent payment it made in 2010.

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