Vital proceeds with $37m first stage of Wakefield Hospital redevelopment
By Jenny Ruth
June 19 (BusinessDesk) - Vital Healthcare Property Trust's manager says it will proceed with the $37 million first stage of the redevelopment of Wakefield Hospital with completion set for the first quarter of 2021.
The first stage comprises a new building to house medical specialist consulting, a full radiology unit and new administration and front-of-house areas. It will incorporate a base isolated design to reduce potential damage in an earthquake.
Hawkins Construction, owned by Australia-based Downer, has been contracted to build the first stage.
The current intention is to spend up to $98 million, up $10 million from the preliminary budget, over three stages, the manager, which is owned by NorthWest Healthcare Properties REIT, says.
When completed, the redevelopment will include up to 64 beds, eight operating theatres, including cardiac and endoscopy facilities, consulting suites and a full range of specialist services on the existing site in Newtown, Wellington.
The hospital operator, Acurity Health, had agreed to a 30-year lease term with the rentalisation rate set at 6.3 percent, excluding a $3 million non-rentalisable contribution to the base isolation component, when it sold its properties to Vital in December 2017.
The lease includes annual rent adjustments of 1.5 times New Zealand's CPI, capped at 3 percent.
Acting chief executive of Vital's manager, Miles Wentworth, says the project will deliver an attractive risk-adjusted return to unitholders and will deliver accretive earnings growth from the year ending June 2020. The units increased by 0.8 percent to $2.40.
Finance will come from the undrawn headroom of Vital's existing debt facilities.