Vital owns the Epworth Eastern Hospital in Melbourne's Box Hill. Photo / supplied
Vital owns the Epworth Eastern Hospital in Melbourne's Box Hill. Photo / supplied
An enormous 817 per cent property revaluation increase boosted specialist listed medical and hospital landlord Vital Healthcare Property Trust's bottom line profit, up 20 per cent in the latest year.
Vital's adjusted funds from operations last year were $47.2 million but it declared today that in the year to June 30, 2021 those rose to $57.4m.
That was largely due to the revaluations although Vital said the year had been one of significant achievement.
Last year's meagre $29m revaluations were in the year to June 30, 2021 boosted to $267m after valuers took a closer look at the 41 hospital, aged-care and outpatient buildings the trust owns here and in Australia.
Net property income also rose annually from $100.1m to $109.6m.
Acquisitions totalling $269m, those revaluation gains of $235m and big development and capital works programmes meant even though around $100m of property was sold, Vital's investment property portfolio's value rose from $2b to $2.6b.
The trust's 41 properties are now valued at $2.63b and the business says it is New Zealand's fourth largest NZX listed real estate specialist by asset value with $1.93b of property in Australia and $701m here.
Pre-tax operating profit rose 24 per cent from $41.1m to $51m.
The trust said 69 per cent of its valuation gains were from its Australian properties and 31 per cent from New Zealand.
"Revaluation gains include $17m from rental increases and leasing activity and $30m of development margin," the investor presentation said.
Aaron Hockly of Vital Health Properties Trust. Photo / supplied
Aaron Hockly, Vital's fund manager, said the latest year was a big one for the business.
"We undertook $387m of property transactions in line with our previously announced five-year portfolio strategy, including securing a number of attractive future development sites and delivered over 60,000sq m of leasing," Hockly said.
The weighted average lease expiry was pushed out to 18.7 years - the longest for any business in the NZX listed property sector.
The trust is redeveloping or expanding 10 to 15 per cent of the properties it owns at any one time.
"Developments are a core part of Vital's strategy. They provide both future earnings and value growth for unitholders and support or complement new and existing tenants to take advantage of changes in healthcare delivery, including an increased focus on ambulatory care," Hockley said.
In the year ended June 30, Vital bought Tauranga's 51-bed Grace Hospital for $95m. That property is leased for 30 years to Southern Cross Hospitals and Evolution Healthcare.
Vital also bought Melbourne's Epworth Camberwell, a 147-bed mental health and specialist rehabilitation centre. It paid A$82.7m for that.
The trust also bought a further five properties for $68.8m and it plans future development work there. Those are in Auckland, the Gold Coast, Brisbane, Melbourne and Adelaide.
Vital's Ascot Hospital and Clinics, Greenlane, Auckland. Photo / supplied
"Post balance date, Vital has unconditionally agreed to acquire the Lower Hutt Health Hub, a purpose-built seismically resilient medical office building and out-patient facility for $46.5m," it said today.
But the trust also sold $100.4m of Australian property in the year being reported on, shifting real estate in Taree, Dubbo and Burnie.
The trust is managed by NorthWest Healthcare Properties Management, a subsidiary of a publicly listed healthcare property group based in Toronto with global assets worth about $7b.
Healthcare real estate is a defensive asset, the company said, and there was growing demand for it. In its outlook, the trust said it was "well-positioned" to take advantage of opportunities in the sector it operates in.
It will focus on development work and consider buying further properties here and in Australia.
It has a market capitalisation of $1.6b and has been trading around $3.10, up 48c or 17 per cent annually.
