NorthWest Healthcare Properties Management Limited (NorthWest), as manager of the Vital Healthcare Property Trust (Vital), is pleased to provide this update as at 31 March 2021.
Vital recorded an 11.7% increase in net property income for the three months ended 31 March 2021 (Q3FY21) and a 9.6% increase financial year to date from the prior corresponding periods reflecting acquisitions, developments and rental growth. This increase in net property income helped Vital record a 14.6% increase in adjusted funds from operations or AFFO per unit for the financial year to date.
Over Q3FY21, Vital recorded a 3.1% increase in net tangible assets per unit. This increase reflects the valuation gains referred to below and favourable foreign exchange movements as the New Zealand dollar weakened versus the Australian dollar. As noted below, the property valuation increases do not
reflect independent valuations which will be undertaken at 30 June 2021.
Consistent with FMA guidance, we are not publishing total return performance for the 12 months ended 31 March 2021. We expect to release total return performance for the 12 months ended 30 June 2021 later this year.
Vital’s portfolio of quality healthcare real estate was valued at $2.36 billion at 31 March 2021; up from $2.25 billion at 31 December 2020, a 4.8% increase. This ~$100m increase reflects $33.7m of acquisitions, $30.0m of development expenditures, $30.6m in favourable foreign exchange movements and $10.9m in revaluation gains from rent increases and development rent commencing. Consistent with prior practice for Q3 reporting, no movements in market capitalisation rates (cap rates) were recorded in the directors’ valuations adopted. Any update to cap rates for movements in the wider Australasian property market will be reflected when Vital’s properties are valued at 30 June 2021.
In excess of 34,000 square metres of leasing was undertaken during Q3FY21 across both the existing portfolio (18,588 square metres) and developments (15,586 square metres) helping to maintain Vital’s long weighted average lease expiry term of 18.9 years and occupancy at over 99% (both as at 31 March 2021).
Despite COVID-19, over 99% of rent was collected over Q3FY21 as well as over the last 12 months demonstrating the resilience of healthcare operators and assets.
All eight current committed developments, totalling $346.9m, remain substantially on-time and on budget other than the scope and cost for Wakefield Hospital which was revised earlier in the year with details released to the market in February 2021.
Stage 1 of the $112.8m redevelopment of Wakefield Hospital is due to complete in May 2021 with an official opening scheduled for late June. Construction for the remaining parts of the project is expected to commence in late 2021.
The $11m expansion and upgrade of Royston Hospital reached practical completion in Q3FY21. The development of an adjoining day surgery remains on track for completion in October 2021. Development of a new A$9.9m oncology centre at South Eastern Private Hospital completed during Q3FY21.
Finally, the New Zealand government has also announced a proposal to consolidate the 20 existing district health boards into a single agency, Health New Zealand. It is currently unclear what impact, if any, this may have on Vital but we applaud any attempts to improve public health systems in New Zealand and Australia. We echo the hopes of one of our key operating partners, Southern Cross, that the private sector will be part of securing a healthier future for New Zealanders. We have capital, your capital, available to invest in health facilities across New Zealand and Australia to help address our widely acknowledged infrastructure deficit.
Aaron Hockly, Fund Manager – Vital Tel 09 973 7301, Email email@example.com
Michael Groth, Chief Financial Officer, NorthWest Healthcare Properties Management Limited Tel +61 409 936 104, Email firstname.lastname@example.org
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