Melbourne Investment Lifts Calan To Record Profit19 February 2006
16 February 2006
Melbourne Investment Lifts Calan ToRecord Profit
Independent Directors repeat "take noaction" recommendation on takeover offer
Statement madeby Bruce Davidson, Chairman and Miles Wentworth, CEO CalanHealthcare Properties Limited
The commissioning of ourflagship Melbourne hospital, Epworth Eastern, has deliveredan increase in rental income that assisted in lifting CalanHealthcare Properties Trust's unaudited after tax profit by62% to a record $5.3 million for the six months ended 31December 2005.
This excellent result further reinforcesthe advice given to unit holders that they should take noaction on the takeover offer made by ING Property Trustuntil they are in receipt of all relevantinformation.
Revenues rose 34% or $2.3 million to $9.2million in the six month period.
Of that increase, $2.2million is attributable to the Epworth Eastern Campus, whichhas been described in the Australian media as the mostadvanced private hospital in Australia.
Unit holders arenow seeing the benefits of our significant NZ$74.7 millioninvestment in Australian healthcare.
The increase inrevenue underlines the value to unit holders of Calan beinga specialist investor in the health sector, and the healthproperty expertise that resides in our management team.
Our head tenant, Epworth Foundation, one of Australia'smost respected healthcare providers, has taken a 20 yearlease over more than 90% of the premises. With regular rentreviews, this property will be a key driver in our abilityto reward unit holders with improving returns well into thenext decade.
The remaining $100,000 increase in rentalincome came from a small number of market rent reviews thatwere completed during the period.
The occupancy rate forour portfolio as at 31 December 2005 was 99.3%, up from99.1% for the corresponding period.
The weighted averagelease term at 31 December 2005, was 11.14 years, up from 9.3years, and our lease term is by far the longest of any NewZealand publicly listed property entity, reinforcing the lowrisk nature of Calan as an investment.
The pre-taxdistribution to investors for the six months to 31 December2005 was 4.6 cents per unit, an 11% increase on thedistribution of 4.15 cents per unit for the priorperiod.
The pre-tax distribution of 2.30 cents per unit,for the December 2005 quarter, was announced to the marketon 26 January 2006.
A pre-tax distribution for the 2006financial year is forecast to be 9.2 cents per unit, anincrease of 8% on 2005's 8.5 cents per unit.
At 31December 2005, the Trust's total assets had increased by$7.6 million (up 4%) to $219 million from the prior periodprimarily due to the increased values of the investmentproperties, partially offset by the sale of the equityinvestment in the hospital operator The Ascot Hospital andClinics Limited.
The independent valuations undertakensince balance date have seen the market value of Calan'sproperty assets increase to $1.29 a unit, and the nettangible asset backing (NTA) for accounting purposes to$1.254 cents a unit (cpu). The reconciliation of marketvalue per unit with accounting NTA is:
Accounting NTA 125.40 cpu Increase in Ascot Clinics value 1.25 cpu Disposal Costs 2.35 cpu
Market Value 129.00 cpu
Debt at$50.3 million results in a debt to total asset ratio of only22.9%, which leaves considerable capacity to extend to theTrust's borrowing limit of 35%. Management had been workingfor some months on a significant Australian transaction, butthe unsolicited offer by ING New Zealand resulted in theAustralian counter party withdrawing from discussions.
Operating expenses for the two six month periods ended 31December remained contained at $1m.
Interest expense was$1.7 million, up $1.3 million on the prior half year. Thisis mainly due to the completion of Epworth Eastern Hospitalin May 2005 resulting in no capitalised interest beingaccounted for in the six months to 31 December 2005, ($1.5million for the six months to 31 December 2004).
AnIndependent Report for unitholders, required in response tothe ING takeover offer, is to be despatched to unitholderson 20 February 2006, accompanied by a recommendation fromthe Independent Directors.
ENDS
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