Vital buys Boulcott Hospital for $30.7m with Australia's Pulse a long-term tenant
Vital Healthcare Property Trust, which owns and develops property for hospitals and healthcare, has bought Boulcott Hospital's real estate in Lower Hutt, and entered into a long-term lease with Australia's Pulse Health Group which bought the operating business earlier this month.
The property investor will spend $30.7 million for the existing site and a further $1 million on residential land next door for future development, the trust's manager said in a statement. The acquisition represents an initial yield of 6.85 percent, with Pulse signing up to a 22-year lease.
"We have prudently sought to acquire high quality healthcare assets in New Zealand in recent years and Boulcott delivers on that," chief executive of the manager David Carr said. "Pulse has articulated and executed on a clear growth plan in New Zealand and Australia and we look forward to working closely with the Pulse team in the future."
Vital Healthcare is investing in private hospital facilities in New Zealand and Australia as it expects demand to increase from an ageing population, a rise in chronic disease and higher patient expectations. About 47 percent of Australians have private health care cover for hospitals, compared to about 30 percent of New Zealanders.
Boulcott Hospital was put on the market by Evolution Healthcare as a condition for the Australian private healthcare investor getting regulatory approval to buy out its partners in local private hospital operator Acurity Healthcare. New Zealand's Commerce Commission was satisfied that Evolution wouldn't be able to exert too much control over the Wellington market if it divested Boulcott when taking over operations of the city's Bowen and Wakefield hospitals.
Pulse acquired the operating business earlier this month for a $16 million payment up front, and a further $4 million contingent on the hospital meeting earnings targets. The ASX-listed company may have to wait for up to six months to get regulatory approvals to buy the business.
Vital units slipped 0.3 percent to $1.86, and have gained 19 percent this year.