Vital Healthcare pays $A12.3m for Sydney hospital

BUSINESSDESK: Vital Healthcare Property Trust has paid $A12.3 million to buy the Hurstville private hospital in Sydney.

The 79-bed, four-operating theatre hospital with associated specialist consulting rooms will provide the trust with an initial yield of about 10% after acquisition costs and the purchase will be funding from the trust's existing bank facility, it said.

The purchase, like other of the trust's recent acquisitions, was made in association with Healthe Care Australia, which has bought the hospital's operating business, while Vital bought the land and buildings.

Vital Healthcare now owns about 10 properties leased to Healthe Care.

Healthe Care will sign a new 20-year lease with inflation-linked annual reviews and this will increase the trust's weighted average lease term to 11.5 years from 11.2 years previously.

The site has the capacity to expand the hospital and the manager plans further development as demand for healthcare services in the area increases.

In December, ANZ Bank sold the trust's management contract and its 9% stake in the trust to Canada's NorthWest Value Partners for $11.5m.

Vital Healthcare units fell 0.8% to $1.24 in morning trading, just below yesterday's year high at $1.26.

They had dropped as low as $1.085 in December after the NorthWest announced it had bought 10%.

NZ portfolio

Vital Healthcare’s New Zealand portfolio has reported some impressive near-doubles in its latest investor update.

In its investor presentation for April and May , it recorded its weighted average lease term (WALT) at 11.2 years, double the average and the highest of the listed property companies.

Gross rental income almost doubled increasing 81% from 2011’s half-year $13.5m to $24.4m for 2012’s half-year.

VHP also recorded a profit after tax of $5.2m for the six months compared to last year’s $2.5m loss.

Its New Zealand investment portfolio increased 6.5% from $517.5m to $551.2m and has an occupancy rate of 99% with 125 tenants across 25 buildings.

VHP’s gearing of 39.8% is the third highest of the listed property companies and has debt drawn t o$218.3m.

There are 131 rent reviews due in the 2012 financial year, with seven expiring representing a paltry slice of the portfolio.

Major expiries are set for 2018 and 2019, when a combined 27 leases expire representing more than 30% of the portfolios value.