26 Jun 2013

Vital shares fall on news of rights issue

7:01 am on 26 June 2013

Shares in Vital Healthcare Property Trust fell nearly 12% on Tuesday after its manager said it will be raising an unspecified amount of new capital from existing investors through a rights issue.

Vital shares fell 16.5 cents to $1.23.5 cents on Tuesday.

Market speculation is that it will raise in the order of $50 to $75 million and use the proceeds to pay down debt.

Vital's gearing is currently more than 44% compared with its limit of 50% , which leaves it with little capacity to buy anything if a compelling proposition arises.

Chief executive of the trust's manager, David Carr, says he can't say how much money the trust will raise but he says the funds will be used to repay debt and he doesn't have any particular acquisition in mind.

The last time Vital asked unitholders for funds was in late 2010 when it raised $151 million to buy 12 hospitals and medical properties in Australia.

Tyndall Investment Management fund manager Rickey Ward said the capital raising does not come as any great surprise.

He said the market was expecting the company to raise capital to write down debt and that the fall in share price was the result of seeing this in "black and white."