Vital Healthcare buys A$92.75M Adelaide cancer centre

Listed medical landlord Vital Healthcare Property Trust has bought a A$92.75 million Adelaide cancer centre and wants to raise $140m in New Zealand to fund that and other developments.

NorthWest Healthcare Properties Management said Vital had bought the Tennyson Centre where specialists work in cancer identification, assessment and treatment via oncology, radiotherapy, imaging and consulting services.

Aaron Hockly, Vital fund manager, said that was the first purchase of a specialist cancer centre for the business.

Vital owns two other Adelaide properties.

“It adds several established healthcare operators to Vital’s tenant base and is expected to provide ongoing growth for unitholders. We will look to expand the centre on the development land acquired as part of this transaction,” Hockly said.

The purchase includes 1920sq m of adjoining land held for future development.

The $140m capital raise will be via a $115m placement and $25m unit purchase plan. Forsyth Barr and Goldman Saches New Zealand have underwritten the placement.

NorthWest will buy at least $37.4m new units representing its 26.7 per cent stake in Vital.

The business is now in a trading halt, expected to be lifted tomorrow.

Key risks are cited as the impact of Covid and its adverse impacts on business. New Zealand investors are also taking a foreign exchange risk, the investor presentation said.

NorthWest as Vital’s manager “currently believes that the outbreak will not have a long-term impact on Vita’s position. However there continues to be uncertainty as to the timeframe in which the impacts of Covid will be felt given factors like the evolution of new variants of the virus and the complexity associated with the timing and logistics of vaccine roll outs,” the presentation said.

Tenant and rental income and property valuation risks are also cited along with funding, reliance on management services and the fact that future distributions are reliant on rents received from tenants across Vital’s portfolio as well as the expenses incurred in the operation.

So future payouts will depend on economic conditions, lease extension negotiations and supply and demand in the property market.

A year ago, Vital announced plans for a $150m capital raising for expansion including three big projects in Australia.

NorthWest said that offer was via a $125m underwritten placement of new units and a $25m unit purchase plan.

The money was so Vital could expand and grow earnings and buy three property projects in Australia.

Units were selling for around $3.01 on the NZX before the trading halt. NZ Herald