New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Oceania Healthcare (OCA) NZ$100m Equity Raise</h2>
Oceania Healthcare (OCA) have announced a NZ$100m equity raise (NZ$80m underwritten placement and NZ$20m non-underwritten retail offer) at a fixed offer price of NZ$1.30 (representing a 6.5% discount to the last close price of NZ$1.39) to fund the purchase of two new sites in Auckland. (1) Waterford on Hobsonville Point – a 100 unit (64 villas and 36 apartments) village with two development zones to add ~60 units/care suites to the development pipeline and (2) a new Franklin site that currently has 2 hectares of leased land and 4.1 hectares of additional land – OCA has operated this site under a lease since 2005 and is currently operated as a care-only site with 44 standard care beds, the land adjacent to the site offers a further ~215 units and care suites to OCA’s development pipeline. The total acquisition price is NZ$77m with the additional c. NZ$20m raised to provide balance sheet flexibility.
Details of interest:
<ul>
<li>Indicative balance sheet impact: The acquisitions are expected to deliver low to mid-single digit NTA accretion per share (last reported was NZ$1.24 per share). The acquisition price of the Hobsonville site (c. NZ$60m) is 3% below CBRE valuation as of 31/3 2020. The equity raise and acquisitions will result in pro-forma gearing of ~28% down from 32.3% at 1H21.</li>
<li>Indicative earnings impact: Near-term, OCA expects that the Hobsonville Point acquisition will result in low to mid-single digit underlying earnings per share accretion in FY22 based off consensus calendarised FY22 estimates. We understand that this is based off of the NZ$60m that is funding the acquisition of the Hobsonville Point site. We estimate that the total impact will be marginally positive</li>
<li>Operational update: Details are limited but points to continued growth as OCA “continue to see strong admissions at aged care centres”, strong growth in premium care suite DMF &amp; PAC revenue and “continued sales momentum”</li>
<li>Developments on track: As consistent with our forecasts, 217 units and care suites will be delivered in FY21. The new acquisitions will add ~275 units and care suites (or an additional 15%) to OCA’s development pipeline.</li>
</ul>
Aaron Ibbotson &nbsp;CFA Director / Senior Analyst, Equities
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.2&amp;permmsgid=msg-f:1694965925381215586&amp;th=1785ba8760bd1562&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_N2LGC2eyFJ5GWaoYFTtbCKx7C0nni3sbelbu1UkxHakghjtbv-h4CY3HgxkfGfZ5Rj8zMi43KEJ5F46Rgf8HW3z3ISza2cyl1J4KiQZHgpouT_X5s6FJxgJM&amp;disp=emb" class="editor-image img-responsive"></figure>
 M: +64 21 470 377 |P: +64 9 368 0024 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Oceania Healthcare (OCA) NZ$100m Equity Raise
Oceania Healthcare (OCA) have announced a NZ$100m equity raise (NZ$80m underwritten placement and NZ$20m non-underwritten retail offer) at a fixed offer price of NZ$1.30 (representing a 6.5% discount to the last close price of NZ$1.39) to fund the purchase of two new sites in Auckland. (1) Waterford on Hobsonville Point – a 100 unit (64 villas and 36 apartments) village with two development zones to add ~60 units/care suites to the development pipeline and (2) a new Franklin site that currently has 2 hectares of leased land and 4.1 hectares of additional land – OCA has operated this site under a lease since 2005 and is currently operated as a care-only site with 44 standard care beds, the land adjacent to the site offers a further ~215 units and care suites to OCA’s development pipeline. The total acquisition price is NZ$77m with the additional c. NZ$20m raised to provide balance sheet flexibility.
Details of interest:

Indicative balance sheet impact: The acquisitions are expected to deliver low to mid-single digit NTA accretion per share (last reported was NZ$1.24 per share). The acquisition price of the Hobsonville site (c. NZ$60m) is 3% below CBRE valuation as of 31/3 2020. The equity raise and acquisitions will result in pro-forma gearing of ~28% down from 32.3% at 1H21.
Indicative earnings impact: Near-term, OCA expects that the Hobsonville Point acquisition will result in low to mid-single digit underlying earnings per share accretion in FY22 based off consensus calendarised FY22 estimates. We understand that this is based off of the NZ$60m that is funding the acquisition of the Hobsonville Point site. We estimate that the total impact will be marginally positive
Operational update: Details are limited but points to continued growth as OCA “continue to see strong admissions at aged care centres”, strong growth in premium care suite DMF &amp; PAC revenue and “continued sales momentum”
Developments on track: As consistent with our forecasts, 217 units and care suites will be delivered in FY21. The new acquisitions will add ~275 units and care suites (or an additional 15%) to OCA’s development pipeline.

Aaron Ibbotson &nbsp;CFA Director / Senior Analyst, Equities

 M: +64 21 470 377 |P: +64 9 368 0024 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Oceania Healthcare (OCA): NZ$100m Equity Raise