Our first investor update of 2025 saw us visited by Aaron Hockley from Vital Healthcare Property Trust who provided an overview of activity and strategies for the future.
Traditional property companies concentrate on offices, shops, and industrial property but Vital Healthcare’s portfolio differs as they concentrate on Healthcare properties such as Hospitals and Clinics. These facilities are usually rented out by health boards and enjoy long tenancy agreements from very high quality tenants. Many of the rental agreements have some sort of link to CPI and Vital are a company we like for these reasons. The company also offers a good dividend yield which currently stands at 6.1% gross (07.03.25)
The property market has been a tough place to be invested over the last couple of years. The high interest rates through 2023 and the first half of 2024 negatively affected commercial property valuations as interest rates have a direct relationship with capitalisation rates, which is the main variable when it comes to valuing property. All else equal, higher rates equal lower values. The drop in the share prices across the listed property sector has resulted in the entire sector trading at a discount to the Net Tangible Assets but falling interest rates should start to feed through to improving valuations.
The rise of internet shopping and flexible working patterns have affected demand for traditional shops and offices but changing consumer habits are unlikely to have a significant effect on demand for healthcare and the properties our clinics and hospitals are based in.
Vital Healthcare Property Trust is the owner of a $3.5billion healthcare property portfolio in New Zealand (31%) and Australia (69%), mainly private hospitals. They have a 19.1 year weighted average lease expiry (WALE), with 86% linked to CPI. Compared to other property companies these are very long lease terms providing strong security compared with many rivals. And the ongoing demand for healthcare supports the increasing demand for healthcare properties. So very much a company we like at Hamilton Hindin Greene and if you would like to know more please do get in touch.
Our next investor update is currently being planned so keep an eye out for updates for our next event.
