Calan wins listing approval
The Calan Healthcare Properties Trust is expected to list on the Stock Exchange on September 7.
Monday, August 23rd 1999, 12:00AM
General manager Chris Donahoe says the move is a compliance listing designed to give unitholders liquidity, as opposed to a capital raising exercise.
The question many ponder is whether, once listed, the fund will trade at a discount or a premium. The question is poignant as the bulk of the listed property trusts in New Zealand trade at a discount.
Donahoe says Merrill Lynch currently run a secondary market for the trust and the unit price is pinned at $1.11- the same as its net tangible asset backing.
He says Calan is quite different to many of the other trusts and he expects it will trade at, or above nta. Currently, the trust is closed and there are five times more buyers than sellers.
He says discounts arise because of obsolescent factors, over-renting and short-term leases.
Calan is focussed on buying and owning properties in the health sector. "Because of our resource based view of the sector we make sure properties are appropriate and the buildings are not obsolescent." Also, the average lease term is, relatively long, at 14 years.
Donahoe describes the listing as "the culmination of five years hard work" as it marks the achievement of a goal which was set five years ago when the fund was established.
The trust is a leading provider of healthcare properties, mainly in the top half of the North Island. Its main property is the newly opened Ascot Hospital and Clinics.
Now Calan has reached critical mass, the focus of attention has shifted to diversification across subsectors, tenants and geographical location.
In its listing profile the fund is forecasting after-tax profit will more than double in the 12 months ending June 30, 2000. This year Calan reported a $4.55 million profit and it is forecasting this will rise to $10.74 million in 2000.
It says base rental income will be increase by 129 per cent due to the addition of new buildings (notably Ascot) coming on stream. Also it is expecting to gain $2.65 million from the unrealised return on investment properties under construction.
The manager intends to distribute all of the after-tax net operating surplus.
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