Medical property landlord Generation Healthcare REIT has upgraded its earnings and distribution for the full year, after booking a bumper interim result.
Backed by a $319 million worth of medical centres and hospitals, the property trust boosted its underlying earnings by 78 per cent, through rental growth across its portfolio and reduced finance costs.
Net operating income rose to $8.4 million for the 2015 first half. The trust’s statutory profit surged even more, by 149 per cent to $7.9 million, compared to $3.2 million in the previous period.
The bottom-line result was boosted by $4.8 million in property revaluations, but offset by other items, including derivation revaluations.
Generation Healthcare has lifted its forecast for underlying net income by 4.3 per cent to 9.60 cents. Previously it was 9.20 cents.
Investors can also expect a 4.3 per cent increase the second half distribution, to 4.38 cents per unit. The previous forecast was 4.20 cents. The full year forecast is now 8.58 cents per unit, representing a 7.3 per cent gain on the previous year.
“The fund continues to be well positioned to provide investors with a secure and growing income stream with the management team progressing a number of initiatives for continued growth in income and value.” chief executive Miles Wentworth said.
In the first half, the property trust struck an agreement with St John of God Health Care to develop a $120million private hospital at Casey, in Melbourne’s south-east urban growthzone.
As well, Healthscope took over tenants at the trust’s Frankston facility, helping drive an expansion there.
Rent reviews increased income across the portfolio. Income was further boosted with six month’s rent from 55 Little Edward Street in Brisbane, which the trust acquired in June 2014. New investment in the Epworth Freemasons facility on Clarendon Street in Melbourne also played a part
Generation Healthcare’s property portfolio increased by 5.5 per cent, or $16.5 million, to $319 million. Much of that gain came with the completion of the Casey Specialist Centre in Berwick, Victoria, the first instalment of a three stage project.
The Casey project and the Healthscope’s commitment at Frankston tapped into the growth potential within the portfolio, Mr Wentworth said.The trust was now well positioned for future value adding growth, he said.