Vital plans $200m capital raise for South Island expansion

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Canada's NorthWest Healthcare Properties Management, which part-owns and manages NZX-listed private hospital owner Vital Healthcare Property Trust, said it planned to raise $200m for Vital's "strategic entry" to the South Island.

NorthWest said Vital's one-for-8.54 underwritten pro rata accelerated entitlement offer would help fund $225m of new acquisitions and developments.

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.

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.

-- Staff Reporter