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Melbourne Investment Lifts Calan To Record Profit

16 February 2006

Melbourne Investment Lifts Calan To Record Profit

Independent Directors repeat "take no action" recommendation on takeover offer

Statement made by Bruce Davidson, Chairman and Miles Wentworth, CEO Calan Healthcare Properties Limited

The commissioning of our flagship Melbourne hospital, Epworth Eastern, has delivered an increase in rental income that assisted in lifting Calan Healthcare Properties Trust's unaudited after tax profit by 62% to a record $5.3 million for the six months ended 31 December 2005.

This excellent result further reinforces the advice given to unit holders that they should take no action on the takeover offer made by ING Property Trust until they are in receipt of all relevant information.

Revenues rose 34% or $2.3 million to $9.2 million in the six month period.

Of that increase, $2.2 million is attributable to the Epworth Eastern Campus, which has been described in the Australian media as the most advanced private hospital in Australia.

Unit holders are now seeing the benefits of our significant NZ$74.7 million investment in Australian healthcare.

The increase in revenue underlines the value to unit holders of Calan being a specialist investor in the health sector, and the health property expertise that resides in our management team.

Our head tenant, Epworth Foundation, one of Australia's most respected healthcare providers, has taken a 20 year lease over more than 90% of the premises. With regular rent reviews, this property will be a key driver in our ability to reward unit holders with improving returns well into the next decade.

The remaining $100,000 increase in rental income came from a small number of market rent reviews that were completed during the period.

The occupancy rate for our portfolio as at 31 December 2005 was 99.3%, up from 99.1% for the corresponding period.

The weighted average lease term at 31 December 2005, was 11.14 years, up from 9.3 years, and our lease term is by far the longest of any New Zealand publicly listed property entity, reinforcing the low risk nature of Calan as an investment.

The pre-tax distribution to investors for the six months to 31 December 2005 was 4.6 cents per unit, an 11% increase on the distribution of 4.15 cents per unit for the prior period.

The pre-tax distribution of 2.30 cents per unit, for the December 2005 quarter, was announced to the market on 26 January 2006.

A pre-tax distribution for the 2006 financial year is forecast to be 9.2 cents per unit, an increase of 8% on 2005's 8.5 cents per unit.

At 31 December 2005, the Trust's total assets had increased by $7.6 million (up 4%) to $219 million from the prior period primarily due to the increased values of the investment properties, partially offset by the sale of the equity investment in the hospital operator The Ascot Hospital and Clinics Limited.

The independent valuations undertaken since balance date have seen the market value of Calan's property assets increase to $1.29 a unit, and the net tangible asset backing (NTA) for accounting purposes to $1.254 cents a unit (cpu). The reconciliation of market value 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 only 22.9%, which leaves considerable capacity to extend to the Trust's borrowing limit of 35%. Management had been working for some months on a significant Australian transaction, but the unsolicited offer by ING New Zealand resulted in the Australian counter party withdrawing from discussions.

Operating expenses for the two six month periods ended 31 December remained contained at $1m.

Interest expense was $1.7 million, up $1.3 million on the prior half year. This is mainly due to the completion of Epworth Eastern Hospital in May 2005 resulting in no capitalised interest being accounted for in the six months to 31 December 2005, ($1.5 million for the six months to 31 December 2004).

An Independent Report for unitholders, required in response to the ING takeover offer, is to be despatched to unitholders on 20 February 2006, accompanied by a recommendation from the Independent Directors.


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