Vital Healthcare Property Trust is planning to enhance its portfolio by “strategically recycling capital” as it braces itself for $65 million in property revaluation losses for the six months ended Dec 31.
The listed hospital developer told the market this morning that 55% of the trust’s portfolio by value had been independently valued and the preliminary draft revaluation loss represented a 1.9% decrease in the six months since June 30.
This reflected a “stable” Australian portfolio and a 6.5% loss for Vital's New Zealand portfolio, the trust said, as well as a 14-basis point “softening” in the weighted average cap rate for the portfolio.
The trust saw a nine-basis point softening for Australia and a 26-basis point softening for NZ.
Vital Healthcare said in a separate announcement to shareholders that it had set up “strategic initiatives” to help enhance its portfolio.
This included selling up to $200m of its existing non-core assets, with the net sale proceeds being initially used to repay and reduce Vital’s debt by up to 2.5%.
The exact impact would depend on pricing achieved, the timing of settlement, and debt costs at the time of any repayment, the trust said.
“We have reviewed all of Vital's existing assets as well as current and proposed developments to ensure Vital continues to deliver for unit holders,” Vital's fund manager, Aaron Hockly, said in a statement.
“The proposed asset sales and the adjustments to Vital's development pipeline are intended to further improve the age, diversity, quality and resilience of the portfolio.”
In particular, he added, the changes would “further increase” Vital's portfolio weighting to newer, high green credentialled buildings in key health precincts.
“The changes will also help achieve the manager's target of having 10-15% of the portfolio's value under development at any one time.”
Vital would also be delaying the development pipeline of its committed and potential projects, which included the proposed A$98.6m (NZ$106.8m) Tasman Medical Centre.
However, the development of a new A$140m (NZ$151.6m) six-green-star-rated life sciences centre in the Gold Coast Health and Knowledge Precinct (GCHKP) would still be going ahead.
Construction was expected to commence in early 2023 and be completed by early to mid-2025.
The trust's manager was owned by Canada-based NorthWest Healthcare Properties Real Estate Investment Trust. Its first-half interim results were set to be released on Feb 23.
Vital Healthcare shares had edged down 0.6% to $2.24 in light trading this morning.
