NZX-listed Vital Healthcare raises funds to buy out the management of its properties

Tuesday, 11 November 2025

Vital Healthcare Property Trust has announced a $220 million capital raise to internalise its management - or buy the management rights to its property from the contracted management company- but it’s not an unusual move for a listed property company, the NZ Shareholders Association says.

Vital owns $3.3 billion worth of properties across Australasia, which it leases to healthcare businesses, including many rest homes.

In New Zealand it has 14 properties worth $1.1b, and its tenants include Health New Zealand, Mercy Ascot, Southern Cross and Evolution Group.

In an announcement to the NZX on Monday, Vital said it had reached an agreement with Northwest Healthcare Properties Management to buy out its management contract.

That would require Vital to pay $214m (plus GST) to Northwest to relinquish its management rights in the company, meaning it would retire as the manager of Vital.

The net after-tax cost to Vital was expected to be NZ$177m, and the $220m capital raise would fund the move and leave Vital well-positioned to unlock attractive near-term developments, the company said.

Vital chair Graham Stuart said the internalisation marked an important milestone for the company, and positioned the business to deliver stronger and more sustainable returns for unit holders. Unit holders own “units” in a trust, as opposed to shareholders, who own a portion of a company.

“By bringing management in-house under a strengthened governance framework, Vital will be well-positioned to unlock future growth, enhance transparency and accountability, and fully align management and investor interests.

“This transaction creates a scalable platform as Vital continues to grow its leadership in healthcare real estate.”

Northington Partners, which was appointed to provide an independent expert view on the valuation of the management rights in Vital, found the termination payment was within their valuation range.

It also found the value of the benefits for unit holders from the internalisation exceeded the after-tax cost of the payment.

Vital’s independent directors unanimously supported the internalisation, and believed it was in the best interests of unit holders - but the internalisation would not require a unit holder vote.

That was something that was a bit unusual about this particular situation, said New Zealand Shareholders Association chief executive Oliver Mander.

“[It] probably reflects the nuances the independent directors factored into the deal, and they may have just wanted to get it done.

“Unit holders will have to consider whether it is what they want, and if not their only option is to sell up. But I think most will be okay with it.”

The deal reflected value for unit holders, particularly given recent comparative management internalisations, Mander said.

“In a perfect world, unit holders would have got to vote, but it is not a perfect world, and in this case it is just one of those things.”

In other respects, Vital’s move to bring its property management in-house was not unusual in recent times, he said.

Most of the NZX-listed property companies had decided internalising management was the best idea, and made the necessary trade-offs to pay out the management companies for those contracts, he said.

“Goodman Property Trust did it last year, and it came with a 9.1x multiple of normalised savings each year, whereas Vital’s multiple is 8.5x so that’s better value.

“Precinct Properties did it back in 2021, with a 9.9x multiple of normalised savings. So it’s par for the course really.”

The capital raise was required because it was necessary to pay for the move somehow, and the company’s funds were tied up in productive properties, he said.

The internalisation was conditional on consent from Vital’s lenders, the FMA granting the new Vital manager a market services licence, no less than $175m being raised in the capital raise, and regulatory approvals from the Foreign Investment Review Board and Overseas Investment Office.

As part of the deal, Vital’s current chief executive and chief financial officer would be retained under new employment agreements.

Key management personnel and most of Northwest’s healthcare property team would also remain with Vital.