Medical landlord's overseas investor a mystery

The role of a surprise Canadian investor in NZX-listed Vital Healthcare Property Trust could emerge at a meeting planned for next month.

Christopher Byrne, Deutsche Bank research analyst, is not expecting a blazing get-together at Vital's annual meeting on December 6.

Unitholder activism against the Auckland-headquartered medical landlord had died down, he said, but the full intentions of new investor NorthWest Value Partners were not known.

One option is for the Canadians to buy out ANZ's OnePath, widely criticised for its role in the business this year. Another option is for NorthWest to buy out all unitholders, Byrne said.

Vital owns 14 properties worth about $517 million, including the Ascot Central and Ascot Hospital at Ellerslie and a number of Australian medical and surgical properties.

This year, Accident Compensation Corporation, Guardians of the NZ Superannuation Fund, Westpac Banking Corporation and BT Funds Management raised management issues at Vital.

But Thurston said the manager had performed well and there was no reason to remove it from office.

ACC has since sold out of Vital.

Byrne questioned the longer-term strategy of the Toronto-based business associated with NorthWest Value Partners which bought 6.2 per cent of Vital this month.

"Over the past six weeks since ANZ halted the internalisation process and started buying units, there have been questions on its intent, with a potential sale to a third party becoming more likely," he said.

"We do not know whether ANZ and NorthWest Value Partners are acting together with the intention that it buys the management rights off ANZ, but with ANZ and NorthWest's combined stakes closing in on 19.9 per cent, a deal could be close.

"There is also uncertainty over what NWVP's end game is - to own the trust or to manage?" he asked.

NorthWest Value Partners is a private real estate investment firm which in September entered into an agreement to buy the German portfolio of Care Capital Group for €27.35 million, ($48.8 million), Byrne said.

"This included five medical and two development properties. It commented that the transaction represented the first step for NWVP in its international growth plans," he said.

"While there are still many permutations given the international expansion plans of NWVP and their modus operandi of owning property, we would expect that they are interested in more than the management contract, "he said.

"The question then becomes what price they would have to pay to secure a full takeover of the trust.

"If they are only acquiring units as a blocking stake for when they purchase the management contract from ANZ, then with the removal of the internalisation option and reduced likelihood on any fee reduction, we would expect the unit price to reduce to the levels pre ANZ activity, or around $1.12."

Vital units are trading around $1.17.

Vital Healthcare Property Trust annual meeting, December 6, South Stand, Reimers Ave, Eden Park.