Vital Healthcare Property Trust's new boss has around $240 million of development work underway - but his Grey Lynn villa do-up still fills him with trepidation.
"It does make me very nervous because renovating has uncertainties," says Aaron Hockly, 41, Vital's new fund manager - a title which equates to chief executive at other listed businesses.
From Vital's headquarters on level 16 of Auckland's AIG Building, the New Zealander and former lawyer describes how he lived in Australia for the past 17 years, in Adelaide initially then Melbourne, working at one business where he was directly involved in $500m-plus of new projects.
Late last year at its Eden Park AGM, Vital introduced Hockly to unitholders as the new boss. He is confident about his role at the expanding business, which owns properties occupied by a variety of healthcare providers.
But it's that character turn-of-the-century place that makes him somewhat nervous.
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"We bought it in 2016, at the peak of the market," he says, describing being drawn to the site which is big for the area at around 800sq m, yet with a home needing work to bring it up to a higher standard. "I'd love it if that was less than $100,000."
A new street-level, internal-access garage and an 80sq m rear living/kitchen/dining area are planned. Consent is being sought for the architecturally-designed additions.
Meanwhile, Vital is spending about $100m on Wellington's Wakefield Hospital and some $140m at Epworth Eastern Hospital in Melbourne.
While he appears unruffled about heading one of this country's more controversial listed property vehicles, Hockly has his fingers crossed for a good Grey Lynn outcome.
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Married with two young children, he was raised in the Paremoremo area, was head boy at Dilworth School and has a law degree and a BA from the University of Auckland.
He moved to Adelaide early last decade to work in the corporate legal field, then to Melbourne where he was a senior solicitor at Clayton Utz. There, he worked with clients including Fletcher Building's Laminex Group, Merrill Lynch, EY, PwC and Hydro Tasmania.
But by far the biggest chunk of his career has been at ASX-listed Growthpoint Properties Australia, where he says he was involved in development work worth around A$500m.
He was at that business from 2009 to 2018, eventually becoming chief operating officer.
"When I started, it was an industrial trust with A$600m of properties and when I left two years ago, it had nearly A$4 billion of property and had become an industrial and office entity," he recalls.
Vital owns properties valued at $1.9b here and in Australia. Three-quarters of that real estate is across the Tasman - a sore point for some investors who accuse it of selling here to favour Australia.
Hockly has taken over from Miles Wentworth, Vital's Melbourne-based interim manager since May last year following the departure of chief executive David Carr.
Having worked for such a long time in Australia, Hockly has lately been establishing a life back in Auckland.
"Culturally, there are certainly differences in working in the two countries," he says. "Australians are more assertive than New Zealanders, which I see as a positive and a negative. Australians have this world view of themselves as laid back, this image of themselves wearing flip-flops and at the barbie. But that's not true at all. Kiwis are far more relaxed in comparison. I found people a lot more assertive in Australia, more like North Americans than here."
In his new role, Hockly has arguably one of the more difficult jobs in the listed property sector after investor criticism of Vital's manager, NorthWest Healthcare Properties Management from Canada.
NorthWest has made changes including a fee overhaul and plans for a dual ASX listing, yet to be voted on at an extraordinary general meeting. The date for that meeting is yet to be set, but Hockly expects it to be before the end of June.
Vital's primary listing will remain on the NZX, he stresses.
So why list on the ASX? He says that is to remove some tax issues. Vital might be liable for less tax and the listing should remove double tax issues for Australians and other overseas investors, he says.
The ASX listing also potentially provides another source of capital, "which is important because 76 per cent of Vital's assets are in Australia," Hockly says.
"By 2030, I think Vital will be at least double the asset base with $4b worth of properties. Now, around 70 per cent of our investors are New Zealand retail and institutional, 25 per cent is owned by NorthWest and the rest is overseas. But in the next 10 years, around a third could be New Zealanders, a third Canadians and a third international. It's not that we expect Kiwi investors to leave, but that more Australians will invest."
Asked about the difficulty of heading a trust which has attracted investor criticism, Hockly says: "I'm coming from the fortunate position that most of the New Zealand fund managers already know me from Growthpoint Properties Australia. We've also had big changes in the last six months in terms of the structure."
Vital paid about $9m to investors in the last financial year. NorthWest charged nearly $30m in fees, a bone of contention for many.
Last April, NorthWest announced that it would reduce its base fees and adopt a tiered structure, but was also reported to be adding a raft of new fees not mentioned in its trust deed, making it unclear whether overall fees would go up or down.
This current year's annual fees to NorthWest could still be around $30m because the portfolio is expanding, even though the base fee has dropped.
Asked about those fees, Hockly cites expenses running a business with nearly $2b of property. That includes his own pay - a figure he would not disclose, although he says it is less than $1m. Top salary bands are not included in Vital's report, unlike most other NZX-listed entities which are companies, not unit trusts.
Hockly says total investor returns in the last financial year were just under 30 per cent, making Vital attractive. Low interest rates had drawn many older investors to Vital, he says.
"People are attracted to us for the yield, stability of the returns and the fact that healthcare is not a widely invested asset class but it's growing in acceptance."
Yet Vital's annual net profit after tax in the last financial year dropped 6.6 per cent from $100.1m to $93.4m because of interest-rate and tax issues.
The listed medical real estate specialist's full-year result for the year to June 30, 2019 cited "non-cash losses from interest rate derivatives ($36.3m) and higher income tax due to a change in legislation partially offset by property revaluation gains."
Vital said gross rental income rose 7.9 per cent to $101.1m and net property income was up 7.7 per cent to $97.7m. When that result was announced in August last year, the portfolio was $1.8b. Occupancy is 99.4 per cent and has a weighted average lease term of 18.1 years.
Hockly now has his feet under two new desks, settling into roles in two cities because Vital and NorthWest's New Zealand headquarters are on Auckland's Shortland St while NorthWest's Australia office is in the Rialto South Tower on Melbourne's Collins St.
Once the Auckland villa is expanded and work finished, he will breathe a sigh of relief.
• Position: Vital Healthcare Property Trust fund manager
• Age: 41
• Lives: Grey Lynn
• Education: Paremoremo Primary School, Dilworth School, University of Auckland
• Qualifications: Lawyer, BA in politics, economics, management. Also a Masters in Finance from Kaplan Professional in Australia
• Career: Practised as a corporate lawyer in London, Adelaide and Melbourne. Has worked at National Australia Bank, Melbourne; Growthpoint Properties Australia, Melbourne; Airways NZ and PwC, in Auckland
• Last film seen: Frozen II
• Last book read: 21 Lessons for the 21st Century by Yuval Noah Harari
• Last trip: To Australia on business
• Drives: A Jaguar F-Pace.