KEY POINTS:
Listed medical landlord Calan Healthcare Properties Trust is looking to double its size, now that a suitor has ditched takeover plans.
Chairman Bruce Davidson says Calan has its eye on big growth opportunities here and in Australia and hopes the Government will become interested in public-private partnerships.
His comments followed the announcement from cornerstone shareholder ING Property Trust that it had abandoned its takeover plans for Calan, which it also manages.
Calan's properties are valued at $221 million but Davidson said a strategic planning meeting in the next few weeks would examine a large expansion of the asset base.
ING said it was disappointed to announce that the terms of the takeover could not be agreed on and that Calan's independent directors opposed the offer.
Jeremy Nicoll, company secretary to the managers of both trusts, said the sticking point was price.
ING entities own 19.9 per cent of Calan.
Davidson was bullish about Calan's future, saying the trust could eventually have a portfolio of around $400 million and might be able to announce its growth strategy to unitholders when it released its full-year financial result soon.
With a June 30 balance date, the results are due next month.
He said David Carr, the general manager, had been working on significant expansion opportunities for some time and the trust had ample capacity to extend itself.
"We've been conservative - that's the mandate we've had. But we're in a position of having a lot of leverage because we're not at our maximum debt levels."
Managers had been investigating opportunities in Melbourne and had held discussions with private hospitals in New Zealand, Davidson said.
He hoped the Government might become more interested in private-public partnerships. These were common in Australia and the trust was keen to expand on this basis.
Calan was established to give sharemarket investors exposure to health sector properties, said to hold big potential as the population ages. The trust does not operate the medical centres, private hospitals or specialists' businesses but owns the properties and rents them to the sector.
The trust focuses on surgical and medical facilities, geriatric and continuing care, primary health care facilities and health support properties.
Calan has big opportunities in Melbourne. In December, the trust bought a 1800sq m site in Box Hill for A$2.7 million. It is near the Epworth Eastern Hospital and Epworth Medical Centre which the trust finished about two years ago.
Former owners of the Box Hill site got approval for a three-level medical centre which could be worth at least A$15 million if Calan went ahead with the development.
The trust said just before Christmas that it was working on pre-leasing deals and expected to start work in Melbourne before the end of this year with the aim of finishing a building next year.
So far, no further announcements have been made.
The trust has elected to become a portfolio investment entity from October 1, and because of this has promised unitholders higher distributions.
Davidson gave a chipper diagnosis of the outlook in his speech to last year's general meeting in November.
"The trust remains in a healthy position with excellent assets and quality tenants on long leases. Management is continuing to actively seek growth opportunities and we are negotiating possible acquisitions both within New Zealand and Melbourne.
"Barring unforeseen circumstances, the board is projecting a slightly enhanced performance and distribution for the 2006/2007 year, as has been shown with the first-quarter gross distribution of 2.35c per unit, 2.2 per cent better than the equivalent period last year."
Calan closed at $1.30 on Friday.
