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

Vital Healthcare Property Trust / Equity Bottom-Up

<h2>Vital Healthcare (VHP) Solid 2H21 revaluations</h2>
Vital Healthcare (VHP) has revalued its portfolio ahead of its FY21 result on 12 August. This has resulted in an NZ$175m (+7.8%) increase in the value of its portfolio since 31 December 2020, bringing full year revaluations to +NZ$235m (+11.3%). VHP’s portfolio is now worth NZ$2.63b which includes completed acquisitions, capital additions, disposals and forex impacts. Revaluations have largely been driven by cap rate compression with VHP’s weighted average cap rate reducing-45bp over the last 6-months and -66bp over FY21 to 4.88% (the second NZ LVP to report stronger cap rate compression in the June-half). The revaluation gains also included NZ$30m of development gains and NZ$17m from higher rental and leasing of vacant space.
While revaluations and dividend reinvestment provides balance sheet capacity to fund VHPs development ambitions, committed gearing remains close to 40% on our numbers. As such we believe significant development commitments likely require additional capital. VHP targets ~10–15% of assets under management being development assets. VHP has indicated it has a further NZ$560m+ of potential developments within its current portfolio. We view development as a more attractive use of capital vs. purchasing stabilised assets on market, given current elevated pricing for property within the medical subsector with long lease terms. Developments also underpin VHP’s +2-3% per annum DPS growth target.
We estimate this revaluation gain lifts NTA by +34cps to NZ$2.89. VHP is trading at +10% premium to its revised NTA vs. the sector average of +2%. We are NEUTRAL rated on VHP.
The next news flow is the FY21 result on 12 August 2021.
Gearing bridge
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Source: Forsyth Barr analysis
Rohan Koreman-Smit Senior Analyst, Equities
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 P:&nbsp;<a href="tel:+6493680085" target="_blank" data-stringify-link="tel:+6493680085" data-sk="tooltip_parent" rel="noopener">+64 9 368 0085</a>&nbsp;| TF: 0800 367 227 Level 23, Shortland &amp; Fort, 88 Shortland Street, Auckland

Vital Healthcare (VHP) Solid 2H21 revaluations
Vital Healthcare (VHP) has revalued its portfolio ahead of its FY21 result on 12 August. This has resulted in an NZ$175m (+7.8%) increase in the value of its portfolio since 31 December 2020, bringing full year revaluations to +NZ$235m (+11.3%). VHP’s portfolio is now worth NZ$2.63b which includes completed acquisitions, capital additions, disposals and forex impacts. Revaluations have largely been driven by cap rate compression with VHP’s weighted average cap rate reducing-45bp over the last 6-months and -66bp over FY21 to 4.88% (the second NZ LVP to report stronger cap rate compression in the June-half). The revaluation gains also included NZ$30m of development gains and NZ$17m from higher rental and leasing of vacant space.
While revaluations and dividend reinvestment provides balance sheet capacity to fund VHPs development ambitions, committed gearing remains close to 40% on our numbers. As such we believe significant development commitments likely require additional capital. VHP targets ~10–15% of assets under management being development assets. VHP has indicated it has a further NZ$560m+ of potential developments within its current portfolio. We view development as a more attractive use of capital vs. purchasing stabilised assets on market, given current elevated pricing for property within the medical subsector with long lease terms. Developments also underpin VHP’s +2-3% per annum DPS growth target.
We estimate this revaluation gain lifts NTA by +34cps to NZ$2.89. VHP is trading at +10% premium to its revised NTA vs. the sector average of +2%. We are NEUTRAL rated on VHP.
The next news flow is the FY21 result on 12 August 2021.
Gearing bridge

Source: Forsyth Barr analysis
Rohan Koreman-Smit Senior Analyst, Equities

 P:&nbsp;+64 9 368 0085&nbsp;| TF: 0800 367 227 Level 23, Shortland &amp; Fort, 88 Shortland Street, Auckland

Vital Healthcare (VHP): Solid 2H21 Revaluations