The only healthcare-focused property trust listed on the NZX, Vital Healthcare Property Trust (VHP), has seen its property portfolio lose $65 million in value in the last six months.
Having just had an independent appraisal of more than half of the company’s assets, VHP, which owns 47 properties spanning Australia and New Zealand, made the news.
Stuff reports that the value of the healthcare real estate company’s $3.6 billion portfolio at the end of September fell by 1.9% from the end of June, while the value of the company’s 16 New Zealand subsidiaries, which included hospitals, medical offices, and ambulatory care properties, fell by 6.5%.
Vital’s fund manager, Aaron Hockly, said that the steeper decline in New Zealand property values was due to interest rates increase more quickly than in Australia and that healthcare property price declines were not exceptional.
It’s “quite normal” right now, he added; “we are the third biggest, so if you look at the top five surrounding us, they have all announced revaluation losses over the past month.”
Hockly said that he would not anticipate a significant drop in the value of healthcare real estate due to robust demand and the stability of the typical 20-year contract.
Although Hockly said it had nothing to do with the recent real estate price decline, VHP declared a shift in its investing strategy.
Smaller properties in Australia and New Zealand outside of significant health precincts are among those Hockly stated will be sold as part of the company’s plan to liquidate non-core assets valued at about $200 million.
The company’s obligations, which now total slightly over $1 billion, will be paid off using the profits from the sale.
As part of its announcement, the company said it would postpone the construction of some projects, such as the A$98.6 million Tasman Medical Centre, but move forwards with the structure of a new A$140 million 6-Star Green Star, life sciences center of excellence building in the center of the Gold Coast Health and Knowledge Precinct.
Hockly explains that the portfolio’s age, variety, quality, and resilience will all be enhanced by the planned asset sales and Vital’s development pipeline modifications. Notably, “the adjustments will further improve Vital’s portfolio allocation to newer, high green-credentialled buildings in crucial health areas.”
According to Stuff, the company’s findings, including details on property value adjustments, will be released in February.
