Retirement and healthcare shares dominate

Most listed property company activity over the past month has involved the retirement and healthcare sector.

The property index eased marginally compared with the NZX50. But over the past 12 months, listed property is still ahead 9.6%, compared with the NZX50 which has gained 2.5%.

During a Rugby World Cup-dominated month, DNZ reported improvements in occupancy and bank-fee and margin savings from a revised loan.

The major events included Ryman Healthcare’s acquisition of its first site in Australia, Summerset listing, and Metlifecare raising new money, which involved its major shareholder Retirement Villages (associated with Macquarie Group) selling down its share from 80% to 51%.

Metlifecare announced the completion of its equity capital raising of nearly $100 million from a placement of new shares raising $40 million, while the secondary sale of shares by shareholder Retirement Villages New Zealand raised $59 million.

The share price has been set at $2.10 a share.

Summerset Group listed at $1.40 after completing a capital raising of $123.6 million. The company was previously 97% owned by Australia’s Quadrant Private Equity, which put 30% of its stake up for sale.

Meanwhile, Vital Healthcare reported a new international investor, with Canadian real estate investment firm, NorthWest, taking a 10% stake.

Forsyth Barr analyst Jeremy Simpson reported the interim company result of Property For Industry “was close to expectations and highlighted a softer revenue line due to asset sales and increased vacancy plus it incurred higher interest and tax costs resulting in a 14.5% decline in distributable profit.”

Mr Simpson tips a stabilising property market plus high dividend yields driving strong performance for the listed property sector in 2011.

“Despite the recovery in share prices, the dividend yields still remain attractive in a low interest rate environment, with gross yields averaging 9%.

Kermadec Property Fund’s net rental income for the half year reduced by $940,000 to $2.97 million (prior corresponding period $3.91 million). This was due to the sale of a property, accounting for approximately $400,000 of the reduction, with leasing and vacancy costs accounting for the remainder.

Distributable income (net profit before unrealised property revaluations, unrealised gains or losses on interest rate swaps and deferred tax impacts) decreased to $1.90 million (prior corresponding period $2.55 million). This was the result of lower rental income due to asset sales and the cost of leasing incentives and vacancy costs.

The company repaid $1.5 million of bank debt during the period, maintaining gearing at 32.4%. In September the company hedged a further $8.5 million of its interest rate exposure for five years at an all-up rate of 6.10% p.a. The company has 48% of its bank debt remaining on variable (floating) interest