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Calan Lifts First Half Performance

Calan Lifts First Half Performance

Statement made by Bruce Davidson, Chairman, Calan Healthcare Properties Trust

The sale of non strategic assets coupled with reduced expenditure assisted Calan Healthcare Properties Trust to lift unaudited after tax surplus by 26% to $4.7 million for the six months ending 31 December 2003.

We are continuing with the implementation of our new strategic direction, which is for Calan to be a specialist health sector investor, focusing on properties in quality locations occupied by quality tenants.

Within that plan we are aggressively working to either advance or exit all non revenue producing assets.

Earnings per share for the six months were 3.498 cents, an increase of 23%.

The pre-tax distribution to investors for the first six months was 4 cents a unit, the same as last year.

Rental income for the six months declined by 7%, to $7 million, a consequence of selling non strategic assets that did not fit our longer term strategy. The loss of income due to property sales was partly offset by rental increases across the majority of our portfolio.

The most significant improvement was made in reducing expenses, and these were down by 38%, or $1.2 million, to $1.98 million.

This was primarily as a result of a reduction in interest expenses achieved by retiring debt, capitalising interest charges on the Epworth Eastern project and restructuring our investment in Australia.

At period end the Trust had assets of $202 million, an increase of 4% in six months.

Our debt to asset ratio is currently 25%, and we have the capacity to extend this to 35% within our Trust Deed. This leaves us with the debt funding capability to complete our flagship project in Melbourne, Epworth Eastern.

The company undertaking the construction of Epworth Eastern has confirmed that they are on course to complete construction in late October this year. The construction contract stipulates a fixed price, with penalties for time over runs.

When completed, unit holders will own an asset valued in excess of $NZ50 million, and will receive a return on the project of 9.5%.

Our focus in the short to medium term is to complete the projects on our books, namely ensuring the sale of land at Waitemata in Auckland goes unconditional, exiting our equity investment in Ascot Hospital & Clinics, converting Ascot Clinics into a yielding investment and completing Epworth Eastern.

We are also looking at potential acquisitions which fit with our strategic direction and will contribute to our earnings growth.

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