Vital Healthcare's first-half distributable income rises on rental returns

Auckland-based hospital and healthcare property developer and investor Vital Healthcare Property Trust says its first-half net distributable income rose 87% as acquisitions and developments helped drive rental income growth.

Distributable income rose to $35.5 million in the six months ended December, from $19 million a year earlier.

Gross rental income rose 54% to $51.8 million including a lease termination receipt of $13.8 million.

Net profit fell to $45.5 million from about $59 million in the previous year, when it had a $45 million revaluation gain compared with $13 million in the latest half.

The company raised $160 million last year and chief executive David Carr says it now has "a strong balance sheet with flexibility to continue to execute on our disciplined scale and diversification strategy."

Its loan-to-value ratio of 24.4% at the end of December was "well below the bank and trust deed covenants of 50%".

"Undeniable population ageing and wider healthcare demand trends continue to support our robust investment thesis," Mr Carr says. "We retain a positive outlook and we remain excited about a range of potential opportunities over the remainder of 2017."

Since the capital raising last July, Vital has acquired two medical office buildings in Melbourne and Sydney for $A55 million.

It also completed an $A18.3 million brownfield development of South Eastern Private Hospital and Dubbo Private Hospital and has five development projects, for about $A63 million, underway.

It completed 33 rent reviews, amounting to about 20% of total income, in the first half, resulting in a 1.2% uplift.

About 65% of Vital's total income remains subject to review by 30 June, and "we expect these reviews will contribute to continued income growth over the period," Mr Carr says.

During the period Vital received a one-off lease termination receipt of $13.8 million as part of rent, make-good and other future obligations at its two properties located in Southport on the Gold Coast of Queensland, Australia.

The company confirmed its second-quarter distribution of 2.125c a unit with a record date of March 9 and payment date of March 23. It affirmed its full-year distribution guidance of 8.5c a unit.

The units rose 0.5% to $2.07 and have risen 11% in the past 12 months.

(BusinessDesk)