Vital Healthcare Property Trust Analysis

Overview

Vital Healthcare Property Trust (Vital) is the only specialist, NZX-listed landlord of healthcare real estate in New Zealand and Australia. Vital's portfolio is valued at ~$2.2 billion.

The manager of the Trust is NorthWest Healthcare Properties Management Limited, a subsidiary of Toronto listed global healthcare fund manager and owner, NorthWest Healthcare Properties REIT.

Performance

The following information was extracted from Vital Healthcare Property Trust's Half Year Results, released on 20 February 2025:

Northwest Healthcare Properties Management Limited (the Manager), as manager of Vital Healthcare Property Trust (Vital), has today released its interim results for the 6 months ended 31 December 2024 (HY25).

Fund Manager, Aaron Hockly said:

“Vital remains the leading investable healthcare property investment platform in Australasia with a high-quality portfolio of geographically diversified healthcare assets and a growing net property income stream.

The strength of Vital’s portfolio was demonstrated through 18% of the portfolio (by area) being leased, extended or renewed during HY25.

Our well capitalised healthcare operator tenants continue to experience growing demand for their services evidenced by an improving rent:EBITDAR ratio for Vital’s hospital tenants (78% of revenue) which reduced from 60% to 53% over CY24, with Australian tenants reducing from 67% to 56% and New Zealand tenants reducing from 46% to 45%.

In addition, we have deliberately sought to diversify our tenant base and no tenant represents more than 19% of Vital’s rent.”

HY25 highlights include:

-Net property income increased by 4.0% on a like for-like, same property and constant currency basis, reflecting rent reviews under existing leases plus the leasing activity referred to below.

-Over 47,000 square metres of space leased, extended or renewed during HY25, representing 18% of Vital’s total property portfolio by net lettable area (21% by income) demonstrating the quality of Vital’s portfolio as well as our active leasing programme. Leasing helped maintain occupancy at ~98% over HY25, extend Vital’s already long WALE to 19.1 years (18.3 years at 30 June 2024) and contribute to the net property income growth noted above.

-NZ$47.9m of non-core assets were sold. Proceeds have been recycled into Vital’s development pipeline as we continue to improve the portfolio across a range of metrics.

-Wakefield Hospital (stage 2A) development in Wellington officially opened and Maitland Private Hospital in Newcastle achieved practical completion, reducing the capital required in future periods to NZ$77.5m for committed developments which are expected to be substantially complete by September 2025.

-For the second year in a row, Vital was acknowledged as a Sector Leader (the highest possible achievement) for ESG by GRESB for listed healthcare entities globally across performance, management and developments.