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Calan Healthcare to Invest More at Ascot Hospital

Published: Thu 20 Oct 2005 02:31 PM
October 20, 2005
Media Statement
Calan Healthcare to Invest More at Ascot Hospital Campus
The growth of private hospital care has created further investment opportunities for Calan Healthcare Properties Trust at the Ascot Hospital campus in Auckland, the site of New Zealand’s largest private hospital.
At today’s annual meeting held in Christchurch, unit holders were told Calan was investing in two projects at its Ascot Hospital Campus. Firstly it was increasing the inpatient bed capacity at Ascot Hospital by 15 and further was developing additional consulting rooms and medical office accommodation as part of a transaction involving the sale of its Ascot Clinics vacant site.
Chairman, Bruce Davidson, told unit holders that it had entered into a heads of agreement which is subject to due diligence and final approvals, that will see the Trust’s last remaining non-yielding asset, a 3,000 sq metre bare land investment on the Ascot campus, which had a book value of $2.78 million, developed.
Calan will sell its land and associated carparks to a developer, and acquire the ground floor of the finished building, which will then be leased to health tenants.
The Trust also has options and pre-emptive rights over other floors in the finished building.
Mr. Davidson said the agreement was “a very positive initiative for unit holders”.
“Calan will earn a 6.5 percent return on its current investment during the construction stage and the transaction is forecast to deliver an attractive profit over and above the current carrying value of our investment.”
It is anticipated construction will commence by the end of the first quarter of calendar 2006.
Chief Executive Miles Wentworth said that with “demand for surgery at Ascot Hospital continuing to grow strongly,” the Trust had agreed to invest approximately $1 million in the “shell” of a 15 inpatient bed extension that would bring the number of beds at the hospital to 94. The tenant will fund fit out, and the return to the Trust on its additional investment will be 9.5%.
Depending upon the timing of resource and building consents it is anticipated that construction will commence at Christmas 2005 and be completed during April or May 2006.
Mr Davidson said the 2005 financial year had been one of “substantial achievement” for Calan Healthcare, and the progress made in 2006 to date put it on target to deliver a quarterly distribution of 2.3 cents a unit, or 9.2 cents for the 2006 year, up 8.24% on that for the previous period.
In completing the A$45 million Epworth Eastern private hospital in Melbourne, and reaching agreement on the use of land at the Ascot campus, Calan Healthcare has achieved its objective of becoming a low risk, medium return investment.
Unit holders were told the Trust was working on a number of growth opportunities for the Trust in New Zealand and Australia. Chief Executive Miles Wentworth emphasised that only projects which meet the Trust’s strict criteria of a minimum return would proceed.
For the financial year ending 30 June 2005, Calan Healthcare reported an after tax operating profit of $10.5 million, up 16%. Its assets at balance date were $218 million, up$6.6 million.
ENDS

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