Vital Healthcare to lift forex cover
Aug. 2 (BusinessDesk) - Vital Healthcare Property Trust will increase is foreign exchange hedging to between 90% and 100% of the value of its net assets in Australia.
“Historically, the trust has had a natural currency hedge of around 90%,” chief financial officer, Stuart Harrison told NZX. “However, with the acquisition of assets in Australia late last year, this has reduced to around 60%.”
The kiwi dollar has rebounded against its tarns-Tasman counterpart having dropped as low as 72.80 Australian cents in March, and recently traded 79.73 cents. Both trans-Tasman currencies have been in uncharted territory against the greenback, with the kiwi at 87.57 U.S. cents and the Australian dollar at US$1.0977.
Last year, Vital Healthcare paid A$164.5 million for 12 hospital and medical properties in Australia, part-funding the purchase with a $151 million rights issue. This purchase almost doubled Vital Healthcare's total assets to $534.4 million as at Dec. 31 last year.
“The natural currency hedge measures the value of the Australian net assets against the trust's borrowings in Australian dollars,” Harrison said.
The board took advice to reflect “the relatively defensive and conservative nature of the trust's activities, the majority of unitholders resident in New Zealand and the desire to provide stability by reducing the exposure to fluctuations that may arise as a result over exchange movements over time.” The board then decided to buy additional currency hedging through forward exchange contracts aligned with the trust's half-year and full-year balance dates, Harrison said.
Vital units are unchanged at $1.15. The units have risen from as low as $1.02 early this year but are still well shy of last October's $1.35 high.