VHP projects to enhance AUS assets & investment returns

11 July 2011

Vital Healthcare Management Limited (“Manager”), the manager of Vital Healthcare Property Trust (“Trust”) today announced that it has entered into development agreements at three of the Trust’s Australian properties. The properties are the Currumbin Clinic in Queensland, Toronto Private Hospital in New South Wales and South Eastern Private Hospital in Victoria. All three properties are leased to Healthe Care.

The projects are part of the Trust’s on-going portfolio management strategy to remain yield-focused and defensive. Conservative growth through value-add developments is part of this strategy.

“We remain committed to working with the Trust’s tenants on projects that improve the quality and value of assets, grow investment returns to the Trust and provide operational benefits to its tenants that will help to meet future growth in demand for healthcare services” said David Carr, General Manager of the Manager.

The project at the Currumbin Clinic (“Currumbin”) on the Gold Coast, Queensland, will result in a two-storey ward extension with 30 new beds and additional consulting suites and carparks. The total cost of the project is forecast at A$8.0 million.

Currumbin is the only private psychiatric hospital on the Gold Coast, with a catchment area that extends into New South Wales. It has previously undergone extensive refurbishment in 1995 and 2009, however it is currently operating at near full occupancy, highlighting the need to provide additional capacity to meet the demand for further services. Construction is due to commence shortly, with a completion date of July 2012.

The development at the 70-bed Toronto Private Hospital in Toronto, New South Wales will add eight new beds to the existing rehabilitation unit at the hospital. The unit is operating at maximum capacity and the extension will allow the hospital to fulfil currently unmet demand for beds in the area. The A$2.45 million project will begin in July 2011, with completion in December 2011.

The third project will see a $A2.9 million rehabilitation centre developed at South Eastern Private Hospital in Melbourne, Victoria. The hospital currently specialises in medical and surgical services, oncology and obstetrics and refers a substantial number of patients for rehabilitation. The creation of a rehabilitation centre will result in this demand being met at the hospital. The development, starting in July 2011, will comprise new consulting rooms, a hydrotherapy pool and gymnasium.

Carr added, “Including the Lingard development announced in April this year, these development projects are forecast to produce an average rental return on the capital invested of around 10.3% for the Trust”.

“We have also now agreed to vary or remove the call options at Currumbin and South Eastern Private Hospital, following the removal of the options at three other properties leased to Healthe Care as announced in April. We have now removed or deferred call options on five of the eight properties leased to Healthe Care” concluded Carr.

ENDS

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