Vital Healthcare has in the past drawn controversy because NorthWest has an external management contract to run Vital, and its management fees are high by industry standards.
Many property trusts have opted to internalise their management.
"It's definitely one that polarises people, given the stake that NorthWest owns, and the external management contract," Harbour Asset Management's portfolio manager, Shane Solly, said.
"If I look at what they have actually delivered, it's a pretty effective way for people to get exposure to the healthcare/real estate sector, which is still growing given the demographic changes that we have seen," he said.
Solly said the capital raise may prove to be well-timed as investors seek out defensive businesses against the background of market volatility and global uncertainty.
Vital's fund manager, Aaron Hockly, said the acquisitions would enhance the trust's geographic diversification.
"They are an opportunity for us to build new relationships with quality tenants and are expected to support AFFO [adjusted funds from operations] growth for Vital's unitholders.
Vital has entered agreements to acquire its first South Island properties.
They are:
• Kawarau Park, Queenstown: (Purchase price $95m). A newly developed health precinct that includes Queenstown's only private hospital.
• 68 St Asaph St, Christchurch: ($50.7m). A large, modern ambulatory care (maternity) and life sciences site, part of one of New Zealand's key health precincts and located 300 metres from Christchurch Hospital.
In addition, the trust would invest in two Auckland developments:
• Endoscopy Auckland, Epsom: ($22.2 million; estimated development costs $21.6 million). Vital has agreed terms to acquire land and buildings at 148 Gillies Ave and 22-24 Kipling Ave, Epsom.
• Ormiston Hospital, Auckland: (estimated development costs $40m). Ormiston Hospital is an existing 5000sq m Vital-owned asset leased to Ormiston Surgical Endoscopy, which is half-owned by Southern Cross Hospitals.
Net proceeds from the offer will be used to repay debt incurred for recently announced acquisitions and developments.
Vital's debt to gross assets ratio will be 33.8 per cent upon completion of the offer, the acquisitions and initial development spend announced today and the other transactions announced in calendar year 2022.
NorthWest has committed to participate in the offer by subscribing for $55m of new units, representing its pro rata 27.5 per cent stake in Vital.
Under the offer, eligible unitholders are entitled to subscribe for 1 new unit for every 8.54 existing Vital units held.
The offer price reflects a 5.4 per cent discount to the closing price of $3.12 on Wednesday and a 4.9 per cent discount to the theoretical ex-rights price of $3.10.
The offer will be by way of an institutional entitlement offer, an institutional bookbuild, a retail entitlement offer and a retail bookbuild.
NorthWest has committed to participate in the offer by subscribing for $55m of new units, representing its pro rata stake in Vital across the $200m offer. It will do this by taking up its entitlements in the institutional entitlement offer.
The balance is underwritten by Craigs Investment Partners and Forsyth Barr Group.
Trade in Vital Healthcare units has gone on hold while the book build takes place.
