Vital releases Notice of Special Meeting 2020

vitalhealthcareproperty.co.nz
28 February 2020


Vital releases Notice of Special Meeting 2020

Vital Healthcare Property Trust advises that the following documents will be sent to unitholders today:

- Notice of Special Meeting;

- Letter from the Board of Directors;

- Voting/Proxy Form for the Special Meeting 2020.

This Special Meeting is being convened to consider and vote on a proposal to restructure Vital to facilitate a foreign
exempt listing on the Australian Securities Exchange (‘ASX’), as further described in the Notice of Meeting.

The Special Meeting will be held at the Pullman Hotel, Auckland on Tuesday 31 March 2020 commencing at 10.00am.

A summary of the proposal in presentation format is also attached.

For more information, visit our website at www.vitalhealthcareproperty.co.nz


– ENDS -






ENQUIRIES
Aaron Hockly, Fund Manager, Vital
NorthWest Healthcare Properties Management Ltd, Phone +64 9 973 7301, Email aaron.hockly@nwhreit.com
Michael Groth, Chief Financial Officer
NorthWest Healthcare Properties Management Ltd, Tel +61 3 8609 8421, Email michael.groth@nwhreit.com
Jason Kepecs, Director, Investments & Investor Relations
NorthWest Healthcare Properties Management Ltd, Tel +64 9 973 7303, Email jason.kepecs@nwhreit.com










About Vital Healthcare Property:

Vital Healthcare Property Trust is an NZX-listed fund that invests in high-quality health and medical-related properties
in New Zealand and Australia. Our tenants are hospital and healthcare operators who provide a wide range of medical
and health services.

With a core focus on healthcare real estate, we understand and accommodate the needs of our healthcare tenants.
We operate in a niche segment of the property market, characterised by long weighted average lease terms and high
occupancy rates and with an ageing population across both countries, it’s also one that’s growing.

For more information, visit our website: www.vitalhealthcareproperty.co.nz

---

Letter from the Board

28 February 2020




Dear Unitholder,
Proposal to add a foreign exempt listing on the Australia Securities Exchange (ASX), in addition to the
existing primary listing on the NZX Main Board
At the annual meeting of Vital Healthcare Property Trust (Vital, the Trust) in October 2019, the Board of the Trust’s
manager advised unitholders that it was investigating a foreign exempt listing on the ASX while maintaining the
existing primary listing on the NZX Main Board.
The proposal presented to you in this Notice of Meeting involves separating Vital’s New Zealand and Australian
properties into separate but stapled trusts primarily to remove inefficiencies for investors outside of New Zealand.
Removing these inefficiencies is required to facilitate a foreign exempt listing on the ASX.
The Board of the manager believes that, as a result of these changes, the Trust would gain:
 an increase in distributions for all unitholders, including adopting a distribution policy with a target payout ratio
of 95-100% of “adjusted funds from operations”. As an example, a New Zealand unitholder with a 30%
marginal tax rate is expected to receive a 10% increase in distributions after tax, based on the illustrative
analysis included in the enclosed Notice of Meeting booklet
1
,
 an expected increase in the value and liquidity of Vital’s units over time, further aided by the potential for index
inclusion in the ASX300 index,
 access to a broader range of capital sources at an efficient cost, and
 a more competitive position for acquisitions and development projects for future earnings growth.
To ensure that unitholders have the benefit of an independent view of the merits of the proposal, Grant Samuel
has been engaged to provide an Independent Adviser’s report its merits for unitholders. Grant Samuel has
concluded that the proposal is “in the best interests of all unitholders when it is analysed in combination with
the capital management initiatives and potential value uplift from an increase in the unit price”.
A foreign exempt listing on the ASX will bring Vital in line with over 50% of other NZX50 listed entities and support
Vital to continue to grow its earnings.
The proposal does not change Vital’s primary listing on the NZX, or its core strategy of owning quality, well
tenanted healthcare real estate in Australia and New Zealand as a means of providing a stable and growing
income stream for investors. PIE status in respect of Vital’s New Zealand assets will also be retained.
The proposal will not impact the fees and governance arrangements approved by unitholders in 2019 and
NorthWest will not receive any additional fees for services provided in connection with the proposal.


1
Refer to Section 5 Financial Impacts for Unitholders in the enclosed Notice of Meeting dated 28 February 2020 for further details and
assumptions.

What you need to do
The proposal requires unitholder approval. A Special Meeting of unitholders of Vital is to be held at 10am on
Tuesday 31 March 2020 at the Pullman Hotel Auckland, Corner Princes Street and Waterloo Quadrant, Auckland
to vote on the matter.
Included in this pack is a Notice of Meeting and a Voting / Proxy form. It is important that you read the Notice of
Meeting. It sets out the full details of the proposal
2
, including a series of amendments that would be made to
Vital’s Trust Deed
3
. It also sets out what you need to do should you decide to support this initiative
4
.
As a unitholder, you may vote in person at the Special Meeting or by appointing proxy (either online or by
completing the enclosed Voting / Proxy form). For your proxy appointment to be valid it must be received by 10am
on Sunday 29 March 2020.
If you are uncertain about the course of action you should take regarding any information contained in this Notice
of Meeting, you should consult your legal, investment, taxation or other professional adviser(s).
If you do nothing the proposal may not proceed
The resolutions require approval by at least 75% of unitholders entitled to vote and who vote. NorthWest is unable
to vote its holding of 24.9% of the units. If the required level of support is not received, Vital will not be listed on the
ASX and Vital’s access to capital going forward will be largely restricted to the New Zealand market. This will limit
Vital’s ability to grow, impact Vital’s cost of capital and hinder Vital’s ability to be competitive for future
opportunities in an increasingly competitive sector.
Directors’ recommendation
The Board unanimously recommend that Unitholders vote IN FAVOUR of the proposal.

If you have any questions relating to the matters on which you are being asked to vote at the Special Meeting,
please contact the Trust’s manager or talk to your legal, investment, taxation or other professional adviser. If you
have any questions about how to complete the proxy form or online voting process, please contact the Trust’s
registrar, Computershare. Contact details for the Trust and Computershare are set out in the Directory at the end
of the Notice of Meeting.
We thank you for your continued and valued support of Vital.
Kind regards

Bernard Crotty
Chair
NorthWest Healthcare Properties Management Limited

Andrew Evans
Independent Director
NorthWest Healthcare Properties Management Limited

Graham Stuart
Independent Director
NorthWest Healthcare Properties Management Limited

Dr Michael Stanford
Independent Director
NorthWest Healthcare Properties Management Limited

Paul Dalla Lana
Director
NorthWest Healthcare Properties Management Limited



2
See in particular Section 2 “Vital following the implementation of the Proposal” on starting on page 18 and Section 3 “Details of the
Restructuring”, starting on page 32.
3
See Schedule 3 “Summary of Trust Deeds” starting on page 87.
4
See “Actions required by Unitholders” on page 9.

---

1
A special meeting of Unitholders of Vital Healthcare Property Trust will be held at the
Pullman Hotel Auckland, corner Princes Street and Waterloo Quadrant, Auckland on
Tuesday, 31 March 2020 commencing at 10.00am
28 February 2020
NOTICE OF
SPECIAL MEETING
to consider a proposal to restructure Vital Healthcare Property
Trust to facilitate a foreign exempt listing on the Australian
Securities Exchange
2020
Important Notice: This Notice of Meeting does not constitute an offer to sell, or a solicitation of an
offer to buy, any securities in any jurisdiction.
It describes the terms of a Proposal to restructure Vital to form the Stapled Group. The Stapled Group
will have a more complex operational and governance structure because it will involve two managed
investment schemes, one registered in Australia and one registered in New Zealand, subject to two
different regulatory regimes. Please read this Notice of Meeting carefully.

2 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
PURPOSE OF NOTICE OF MEETING
This Notice of Meeting is dated 28 February 2020. It describes
the terms of the Proposal (refer to the Glossary on page 63 for
the definition) that is being put to Unitholders for their approval.
It contains other information material to the Unitholders’ decision
as to whether to approve the Proposal.
This Notice of Meeting is not a product disclosure statement
or prospectus and the transactions contemplated by it do not
involve any “regulated offers” for the purposes of the Financial
Markets Conduct Act 2013.
Vital Healthcare Property Trust (VHPT) is subject to continuous
disclosure obligations under the NZX Listing Rules. Market
releases for VHPT, including its most recent financial statements,
are available at www.nzx.com under the ticker code VHP.
UNITHOLDER MEETING
A Special Meeting of Unitholders will be convened, at the
Pullman Hotel Auckland, corner Princes Street and Waterloo
Quadrant, Auckland on Tuesday, 31 March 2020 commencing at
10.00am to consider, and if thought fit, pass a Special Resolution
approving the Proposal.
For that purpose, this Notice of Meeting is being sent to all
Unitholders explaining the Proposal.
Unitholders entitled to attend the Special Meeting and vote may
attend in person or appoint a proxy to vote, in accordance with
the instructions set out in this Notice of Meeting.
In view of the importance of the Proposal, Unitholders electing
to appoint a proxy to vote are urged to complete that process as
soon as possible if they do not plan to attend the Special Meeting.
If you are uncertain about the course of action you should take
regarding any information contained in this Notice of Meeting,
you should consult your legal, investment, taxation or other
professional adviser(s).
FORWARD-LOOKING STATEMENTS
This Notice of Meeting contains forward-looking statements
including, without limitation, forward-looking statements
regarding the implementation of the Proposal, the potential
impact on Unitholder returns, the financial position, business
strategy and plans and objectives of management for future
operations of Vital, based on the Manager’s current expectations
about future events.
Forward-looking statements contained in this Notice of Meeting
are subject to known and unknown uncertainties, assumptions
and risks (including those risks set out in Section 7 Risks) that
could cause the Proposal not to be implemented or the actual
results, investment returns, performance or achievements
to differ materially from those expressed or implied by such
forward-looking statements. Such forward-looking statements
are based on numerous assumptions regarding satisfaction of
conditions for and completion of the Proposal, Vital’s operational
performance, the success of Vital’s present and future business
strategies and the environment in which the Stapled Group will
operate in the future. Matters not yet known to the Manager or
not currently considered material by the Manager may impact
these forward-looking statements.
The statements in this Notice of Meeting reflect views held as at
the date of this Notice of Meeting. In light of these uncertainties,
assumptions and risks, the forward-looking statements
discussed in this Notice of Meeting may not occur. Given these
conditions, Unitholders are cautioned not to place undue reliance
on such forward-looking statements.
Subject to any continuing obligations under applicable law or
any relevant Listing Rules, the Manager expressly disclaims any
obligation to disseminate after the date of this Notice of Meeting
any updates or revisions to any such forward-looking statements
to reflect any change in expectations or events, conditions or
circumstances upon which any such statements are based.
NO INVESTMENT ADVICE
The information outlined in this Notice of Meeting does not
constitute financial product, tax or investment advice. This Notice
of Meeting has been prepared without reference to the particular
investment objectives, financial situation, taxation position and
particular needs of individual Unitholders. It is important that
Unitholders read this Notice of Meeting in its entirety before
making any decision on how to vote in respect of the Special
Resolution to approve the Proposal.
It is important that Unitholders consider the risk factors outlined
in Section 7 Risks and the other information contained in this
Notice of Meeting in light of their particular circumstances.
Unitholders in any doubt in relation to these matters should
consult their investment, financial, taxation or other professional
adviser.
NZX MATTERS
A copy of this Notice of Meeting has been provided to NZX.
Neither NZX nor any of its officers takes any responsibility for the
contents of this Notice of Meeting.
INFORMATION FOR UNITHOLDERS OUTSIDE
NEW ZEALAND
Unitholders outside New Zealand should review the information
provided at Schedule 8 of this Notice of Meeting.
GENERAL INFORMATION
Unless otherwise indicated, capitalised terms have the meaning
set out in the Glossary.
All references to time in this Notice of Meeting are to New
Zealand Standard Time (unless the context requires otherwise).
Any reference to $ and cents is to New Zealand currency, unless
otherwise stated.
Due to rounding, some totals may not correspond with the sum
of the separate figures.
DISTRIBUTION RESTRICTIONS
The distribution of this Notice of Meeting may be restricted by
law. If you come into possession of this Notice of Meeting, you
should observe all such restrictions. Any non-compliance with
these restrictions may contravene applicable securities laws.
ENQUIRIES
For all enquiries relating to the Proposal or this Notice of
Meeting, including how to complete and return the proxy form
or appoint a proxy online, please contact the Vital Proposal
Information Line on 0800 650 034 (within New Zealand) or
+64 9 488 8777 (outside New Zealand) between 8.30am to
5.00pm Monday to Friday (New Zealand time) or by email at
vital@computershare.co.nz or your financial adviser.
IMPORTANT INFORMATION

3
Table of
Contents
5
8
9
10
18
32
38
42
49
56
58
59
61
65
82
87
110
113
122
125
127
130
Overview
Key dates
Actions required by Unitholders
1.
Answers to key questions
2. Vital following implementation of the Proposal
3. Details of the Restructuring
4.
Advantages and disadvantages
5. Financial impacts for Unitholders
6. Additional information
7
. Risks
8.

F
ormal notice and agenda
9.
Procedur
al notes
Glossary
Schedule 1: Independent Adviser Report
Schedule 2: Assumptions underlying the distribution analysis and
supplementary Unitholder distribution impact analysis
Schedule 3:

Summar
y of Trust Deeds
Schedule 4:

Super
visor letter to Unitholders regarding the Special Resolution
Schedule 5:
KPMG tax modelling opinion
Schedule 6:

Ov
erview of the New Zealand foreign investment fund regime and
application to New Zealand Unitholders
Schedule 7:

Detailed s
tructure charts – before and after
Schedule 8:

F
oreign Unitholder disclosure
Directory

4 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
Interpretation
When reading this Notice of Meeting, references to:
• VHPT means Vital Healthcare Property Trust prior to the
Restructuring
• Vital Australia means Vital Healthcare Property Trust
after the Restructuring, which will hold the Australian
Properties
•
Vital NZ
means a new managed investment scheme to be
established for the purposes of holding the NZ Properties
after the Restructuring
•
Vital means (a) the VHPT Group prior to the Restructuring
and (b) the Stapled Group (comprising Vital NZ and Vital
Australia) after the Restructuring
In addition:
• Variations means the proposed amendments to the
VHPT Trust Deed, including the Distribution Amendments,
the Stapling Amendments and the Australian Migration
Amendments
•

R
estructuring means the proposed restructuring of VHPT
as summarised in Section 3 Details of the Restructuring
•
Proposal
collectively means the Variations, the
Restructuring and the various associated corporate changes
described in Section 2 Vital following implementation of the
Proposal, including the amendments to Vital’s distribution
policy
For more detailed definitions, please refer to the Glossary.
Artist render of Wakefield Hospital, Wellington, New Zealand on development completion.
Cover: Artist render of Epworth Eastern Hospital, Melbourne, Australia (East Tower).

Unitholders are being asked to consider
and vote on the Proposal, which the Board
of the Manager believes is a compelling
opportunity to more strongly position
Vital for the future and enhance it as an
investment proposition. The Proposal
includes a series of amendments to
the VHPT Trust Deed (the Variations)
that will allow a restructuring of Vital
as part of a process to add a foreign
exempt listing on the Australia Securities
Exchange (ASX), in addition to the existing
primary listing on the NZX Main Board.
The Board considers that the
Proposal has compelling advantages
for Unitholders, including:
•

All Unitholders are e
xpected to
receive higher Net Distributions
after the Proposal
• Potential for an increase in the
value and liquidity of Vital units
over time
•
Acces
s to a broader range of
capital sources at an efficient
cost of capital
•
Vital more competitively
positioned for future acquisition
and development projects
The Proposal involves separating Vital’s
New Zealand and Australian real estate
investments into separate holding vehicles,
then Stapling the units of those vehicles to
form the Stapled Group. It would involve
VHPT evolving to the Stapled Group,
whereby:
•
New Zealand assets (~25% of portfolio)
are held through a New Zealand
Portfolio Investment Entity (PIE, refer
to the Glossary) structure which is tax
efficient for New Zealand Unitholders
(Vital NZ); and
•
Australian assets (~75% of portfolio)
are held through a managed
investment scheme registered with
ASIC under the Corporations Act,
which also qualifies as an Australian
managed investment trust (MIT)
for Australian tax purposes (Vital
Australia or Vital Aus).
Units in Vital NZ and Vital Australia will be
Stapled together so they cannot be traded
separately (referred to as a Stapled Unit).
These Stapled Units will be listed on both
NZX and ASX.
Overview
OVERVIEW 5

6 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
The Proposal does not involve changing Vital’s
specialist healthcare property strategy. Unitholders
will retain the same ownership of, and exposure to,
Vital’s underlying property assets as they do before
the Restructuring.
As part of the Proposal, the Manager proposes to
change Vital’s distribution policy to a target payout
ratio of 95-100% of “adjusted funds from operations”
(AFFO). In addition, there is expected to be a one-
off tax benefit for some New Zealand Unitholders
(further detail is provided in Section 5 Financial
Impacts for Unitholders.)
1
The same governance arrangements will largely
continue to apply to the Stapled Group after the
implementation of the Restructuring. In broad terms,
the board and management of Vital will remain the
same; however, separate management entities will
be established. The individuals who comprise the
current board will sit on both sides of the structure,
as the board of the managers of Vital NZ and Vital
Australia. There will be some adaptations to reflect
the fact that Vital NZ will be subject to New Zealand
laws and Vital Australia will be subject to Australian
laws.
The changes made regarding fees and governance
settings during 2019 will be fully preserved. For
the avoidance of doubt, the Manager and its related
parties will not receive any work fees, project
fees or otherwise for any services provided in
connection with the Proposal, and the Manager’s
incentive fee will be substantively unaffected by the
Restructuring
2
.
The Manager and its associated persons (including
the directors) are prevented from voting on the
Variations as a result of the voting restriction in
section 163 of the FMC Act.
UNITHOLDER APPROVAL REQUIRED
Unitholders are being asked to vote on the Proposal,
which will be implemented by the Manager if
approved and certain other conditions are satisfied.
Those conditions include the Proposal being able to
be implemented before 30 June 2020.
INDEPENDENT ADVISER SUPPORTIVE
To ensure that Unitholders have the benefit of an
independent view of the merits of the Proposal,
Grant Samuel has been engaged to provide an
Independent Adviser’s report. Grant Samuel has
concluded that the Proposal is in the best interests
of all Unitholders when it is analysed in combination
with the capital structure initiatives and potential
value uplift from an increase in Vital’s unit price.
1 For New Zealand Unitholders who use the annual fair dividend rate method there will be a one-off tax benefit in the 2020/21 tax year based on the expected timing of the
Restructuring implementation. This does not apply if New Zealand Unitholders sell their units in the year of implementation. For New Zealand Unitholders who use the
periodic fair dividend rate method there will be a small one-off reduction in their distribution benefit based on the expected timing of the Restructuring implementation.
Please refer to Section 5 Financial Impacts for Unitholders for further information.
2
Some amendments to the terms of the incentive fee are required to reflect the Stapled Group structure, however the economic substance is unchanged.
DIRECTORS’ RECOMMENDATION
The Board unanimously recommends that Unitholders vote IN FAVOUR of the Proposal.

After the Restructuring, the NZ Properties will be ultimately owned by Vital NZ, which will be based in New Zealand and the Australian Properties will be ultimately owned by Vital
Australia, which will be based in Australia. The current Manager and Supervisor of VHPT will be responsible for Vital NZ, and Vital Australia will be managed by the Australian
Manager and overseen by the Responsible Entity. Refer to Section 2 Vital following the implementation of the Proposal for further information.
Structure after the Restructuring (simplified)
VHPT’s Current Structure (simplified)
Under the current structure, the NZ Properties and the Australian Properties are ultimately owned or controlled by VHPT which is based in New Zealand. Trustees Executors
Limited is VHPT’s licensed supervisor and NorthWest Healthcare Properties Management Limited is the licensed manager.
New Zealand
Australia
Vital Units are
traded on NZX (VHP)
Australian
Properties
Board of
Manager
NZ
Manager
NZ Supervisor
UNITHOLDERS
NZ
Properties
New Zealand
Australia
Vital NZ and
Vital Australia
Units are
Stapled and
traded together
on NZX and ASX
Australian
Properties
Board of
Manager
Board of
Manager
Board of
RE
NZ Manager
AU Manager
(appointed by the Responsible
Entity under the Investment
Management Agreement)
NZ Supervisor
AU Responsible Entity
UNITHOLDERS
NZ
Properties
Stapled Units
VITAL
HEALTHCARE
PROPERTY TRUST
VITAL
NZ
VITAL
AUS
OVERVIEW 7

8 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
*Because trades on NZX take two working days to settle,
trades during Thursday 23 April and Friday 24 April 2020 will
not have settled before the Stapling and Distribution Record
Date. A Unit traded during these two days will trade on a “cum
entitlement” basis, meaning that the purchaser will be entitled
to receive the corresponding Vital NZ Unit. Effectively this
means that the purchaser will receive Stapled Units when the
trade settles.
For the brief period between the date on which the Vital NZ
Units have been distributed and VHPT is registered with
ASIC and becomes Vital Australia, trading of Stapled Units
on the NZX will continue. For this period each Stapled Unit
will comprise a Vital NZ Unit and a VHPT Unit. Trading on
ASX will not commence until after VHPT has been registered
with ASIC as a managed investment scheme governed by the
Corporations Act. The Manager will provide updates of how
these key steps are being implemented via the NZX markets
announcements platform (MAP).
These dates, and future dates in this Notice of Meeting
generally, are subject to change, are indicative only and,
subject to the requirements of the FMC Act, the NZX Listing
Rules, and the ASX Listing Rules, may be amended by the
Manager at its absolute discretion. The Proposal is conditional
on it being able to be implemented before 30 June 2020.
Any changes to the above timetable will be announced via the
NZX Markets Announcements Platform (MAP) and notified on
Vital’s website www.vitalhealthcareproperty.co.nz.
All references to time in this Notice of Meeting are to
New Zealand Standard Time (unless the context requires
otherwise).
Any obligation to do an act by a specified time in New Zealand
time must be done at the corresponding time in any other
jurisdiction.
Key Dates
INDICATIVE DATE AND TIMEEVENT
28 February 2020Notice of Meeting published
10.00am, 29 March 2020Last time for receipt by the Registrar of proxy forms
10.00am, 29 March 2020Last time for completion of online proxy appointment
10.00am, 31 March 2020Special Meeting of Unitholders to consider the Proposal
If the Proposal is approved by Unitholders and other conditions satisfied, the Board
will set the dates over which the Proposal will be implemented. The below dates are
indicative only and assume that the conditions will be satisfied, and the Proposal
will be ready to be implemented, within one month of the Special Meeting.
10.00am on Thursday 23 April 2020Trading begins on a cum entitlement basis*
5.30pm on Friday 24 April 2020Stapling and Distribution Record Date
Before 9.00am 27 April 2020Distribution of Vital NZ Units to Unitholders and Stapling
to VHPT Units. Trading on the NZX Main Board continues, but of
Stapled Units
Early MayStapled Units commence trading on the ASX, as well as the NZX
Main Board

9 9
Actions required
by Unitholders
1. READ THIS NOTICE OF MEETING AND SEEK ADVICE IF YOU HAVE ANY
QUESTIONS
This Notice of Meeting contains important information. You should read it carefully
and in its entirety as part of your consideration of the Proposal.
Unitholders should specifically refer to:
• the advantages and disadvantages in Section 4;
• the financial impacts for Unitholders in Section 5;
•
the risks in Section 7;
• the details on how to vote in Section 9;
• the Independent Adviser Report in Schedule 1; and
•
the letter from the Supervisor in Schedule 4.
If you have any questions in relation to this document or the Proposal, you should
contact the Vital Proposal Information Line on 0800 650 034 (within New Zealand)
or +64 9 488 8777 (outside New Zealand) between 8.30am to 5.00pm Monday
to Friday (New Zealand time) or by email at vital@computershare.co.nz or your
financial adviser.
If you are uncertain about the course of action you should take regarding any
information contained in this Notice of Meeting, you should consult your legal,
investment, taxation or other professional adviser(s).
2. VOTE ON THE PROPOSAL
Unitholders will be asked to vote on the Proposal at the Special Meeting scheduled
to be held at the Pullman Hotel Auckland, corner Princes Street and Waterloo
Quadrant, Auckland at 10.00am, on Tuesday, 31 March 2020. Unitholders may vote:
• in person - by attending the Special Meeting; or
•
b
y proxy – by appointing a proxy to vote on your behalf either online at
www.investorvote.co.nz or by completing and returning the enclosed proxy
form in accordance with the instructions set out in Section 9 Procedural Notes.
Proxy appointments must be completed and received by 10.00am on Sunday 29
March 2020 in order to be valid.
If the Proposal is approved and the conditions to implementation are satisfied,
Unitholders are expected to receive their holding statements for their Stapled Units
(i.e., Vital Australia Units and Vital NZ Units) in May/June 2020.

10 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
1. Answers
to key questions
This Section answers some of the key questions you may have about the Proposal. This Section
should be read together with the other Sections of this Notice of Meeting.
THE PROPOSALWHERE TO GO
FOR FURTHER
INFORMATION
What am I being asked to
approve?
Unitholders are being asked to vote on the Proposal described in this
Notice of Meeting, which includes the Variations to the VHPT Trust
Deed, the implementation of the Restructuring and various associated
corporate changes.
Section 8 Formal
Notice and Agenda
for the text of the
Special Resolution
that Unitholders
are being asked to
approve.
Who is the issuer of this
Notice of Meeting?
The Manager has issued this Notice of Meeting to all Unitholders for
the purposes of calling the Special Meeting to be held at the Pullman
Hotel Auckland, corner Princes Street and Waterloo Quadrant,
Auckland at 10.00am, on Tuesday, 31 March 2020.
Section 8 Formal
Notice and Agenda
What is the purpose of
the Proposal?
When VHPT was established in 1994, its original investments
were in healthcare real estate assets in New Zealand. Over time, a
large proportion of VHPT’s investment opportunities and property
acquisitions have been in Australia. As at 31 December 2019, VHPT’s
portfolio of healthcare real estate assets was valued at $1.93bn, with
that value being split between NZ assets (~25%) and Australian assets
(~75%).
However, VHPT’s structure has material financial or tax disadvantages
for international investors and, as a result, VHPT has been slow to
establish a material unitholder base outside of New Zealand.
The Manager proposes to restructure VHPT, with a view to removing
the aspects of VHPT’s current structure that discourage international
investors, which will facilitate an ASX foreign exempt listing. This is
expected to provide Vital with access to broader and deeper pools
of capital, thereby improving its competitive position for future
growth opportunities and providing all Unitholders with increased
distributions, value recognition for Vital Units and liquidity.
Letter from the
Board
Section 4
Advantages and
disadvantages
What is the
Restructuring?
The Restructuring is a key part of the Proposal. It involves separating
Vital’s New Zealand and Australian real estate investments into
separate holding vehicles, then stapling the units in those vehicles
to form the Stapled Group. It would involve VHPT evolving into the
Stapled Group, whereby:
•
Ne
w Zealand assets (~25% of portfolio) are held through a New
Zealand managed investment scheme that will be registered
with the FMA and a NZ PIE (Vital NZ); and
•
Aus
tralian assets (~75% of portfolio) are held through an
Australian managed investment scheme registered with ASIC
under the Corporations Act (Vital Australia).
Units in Vital Australia and Vital NZ will be stapled together so they
cannot be traded separately (referred to as a Stapled Unit). These
Stapled Units will be listed on both the NZX and ASX.
Vital will continue to be governed and managed by the same board
members and management team.
Section 3 Details of
the Restructuring

ANSWERS TO KEY QUESTIONS 11
What are the terms of
the Variations to the
VHPT Trust Deed?
In order to facilitate the implementation of the Proposal, certain
amendments to the VHPT Trust Deed are required. In broad terms, the
proposed amendments that constitute the Variations fall into three
categories:
• Distribution Amendments: amendments to allow VHPT to
make a distribution of Vital NZ Units to Unitholders (the current
VHPT Trust Deed only contemplates distributions of cash);
• Stapling Amendments: the addition of clauses to provide for
the Stapling of Vital NZ Units and Vital Australia Units and to
facilitate the operation of the Stapled Group; and
• Australian Migration Amendments: amendments to allow
VHPT to migrate to Australia and become Vital Australia on
Registration, and to make other changes that are consistent
with Vital Australia transitioning to an Australian managed
investment scheme registered with ASIC under the Corporations
Act. For clarity, Vital NZ will remain a New Zealand managed
investment scheme registered under the FMC Act.
Schedule 3
Summary of Trust
Deeds - Part A
What are the expected
benefits and potential
disadvantages to
consider when deciding
how to vote?
The principal expected benefits of the Proposal include:
• An expected increase in distributions to all Unitholders;
• A change in distribution policy to target a payout ratio of 95-
100% of AFFO, as is typical for Australasian property trusts;
• Access to a broader range of capital sources including a
deeper pool of equity investors through listing on the ASX and
addressing structural inefficiencies for offshore investors. This
will ensure Vital has an efficient cost of capital and will also
position Vital to now explore long term diversified debt;
• A more competitive position for securing acquisition and
development projects for future earnings growth; and
•
P
otential for an increase in the value and liquidity of Vital units,
through increased accessibility and demand from Australian
and offshore investors, and supported by index inclusion in the
ASX/S&P 300 index which Vital will actively target.
The potential disadvantages of the Proposal include:
•
Operating as the Stapled Group will result in slightly increased
operational complexity for Vital to manage and increased
operating costs;
• The one-off costs required to be incurred by Vital to implement
the Proposal (albeit they will not impact distributions). A
material portion of the costs will be incurred regardless of
whether the Proposal is approved or not;
• Vital’s gearing will increase by approximately 3.1% on a proforma
basis as a result of the Proposal. The Board will continue to
ensure Vital’s balance sheet is prudently managed;
• New Zealand Unitholders will transition from holding units in
a New Zealand PIE entity only to holding units in both a New
Zealand PIE entity (Vital NZ) and an Australian MIT entity (Vital
Australia). This will change how New Zealand Unitholders are
taxed on their investment in Vital and will require almost all New
Zealand Unitholders to provide additional income information
in their New Zealand income tax returns than what is currently
required;
Section 4
Advantages and
disadvantages
Section 5 Financial
Impacts for
Unitholders

12 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
What are the expected
benefits and potential
disadvantages to
consider when deciding
how to vote?
continued
• There will be some operational, legal and regulatory
complexities as a result of the Stapled Group being subject to
both the Australian and New Zealand managed investment
scheme regimes; and
• The Supervisor’s role is defined by the New Zealand managed
investment scheme regime and will reduce under the Stapled
Group structure, as it will only relate to Vital NZ. The regulation
of Australian managed investment schemes provides alternative
protections, but does not require an independent supervisor in
the same way as the New Zealand regime.
Section 4
Advantages and
disadvantages
Section 5 Financial
Impacts for
Unitholders
What steps are
necessary to implement
the Restructuring?
In broad terms, the Restructuring would involve the following key
steps:
1. VHPT will establish Vital NZ as a New Zealand managed
investment scheme, wholly-owned by VHPT.
2. VHPT’s NZ Properties will be transferred to Vital NZ.
3. Vital NZ will be demerged by VHPT distributing Vital NZ Units to
Unitholders to match their VHPT Units (i.e., for every one VHPT
unit you hold, you will be distributed one Vital NZ Unit). Vital NZ
Units will be immediately Stapled to VHPT Units.
4. VHPT and its New Zealand subsidiaries, VHPL and Colma,
will migrate to Australia. VHPT will become Vital Australia, a
managed investment scheme registered with ASIC under the
Corporations Act.
5. Stapled Units will be traded together as a single tradable
instrument on the NZX Main Board (primary listing) and ASX
(foreign exempt listing) under the ticker code VHP.
Section 3 Details of
the Restructuring
What is Stapling?
If the Proposal is implemented, Vital NZ Units and Vital Australia Units
will be Stapled together so that they must be traded together. In other
words, one Vital NZ Unit cannot be sold without also selling one Vital
Australia Unit, and vice versa. Stapling is achieved through provisions
in the respective trust deeds of Vital Australia and Vital NZ, and also
through the Stapling Deed between the two sides of the Stapled Group.
Once Stapled, Vital NZ Units and Vital Australia Units will appear as
a single security, under a single ticker code, that can be traded on the
NZX Main Board and on ASX.
Stapling will not affect Unitholders’ rights to receive any distributions
from Vital.
The ASX has accommodated a wide range of structures that involve
stapled securities.
Section 2 Vital
following
implementation
of the Proposal
- “Stapling
Mechanics”
Why will an ASX
listing for Vital attract
Australian and offshore
investors?
The Manager believes that an ASX listing will provide Vital with access
to a broader range of capital sources at an efficient cost of capital. In
particular, with an ASX listing, the Manager expects Vital to be a more
attractive investment proposition to Australian and offshore investors
given:
• ~75% of Vital’s property assets are currently located in Australia;
• at completion of the Proposal, Vital is expected to be the only
healthcare property trust listed on the ASX;
• the Manager believes that healthcare property is an asset class
of increasing focus and demand; and
•
addressing the tax structural inefficiencies for Australian
investors and adding an ASX listing will remove current
impediments that discourage them from investing in Vital.
Section 4
Advantages and
disadvantages
What is a foreign exempt
ASX listing?
ASX foreign exempt listings are for entities which are listed on another
stock exchange and have a secondary listing on the ASX. They must
primarily comply with the rules of their home exchange and are
exempt from complying with most of the ASX Listing Rules.
In this case, Vital will have its primary listing on the NZX and primarily
comply with the NZX Listing Rules. It will be exempt from complying
with most of the ASX Listing Rules.
Being listed on the ASX as well as the NZX will allow investors
to trade in Stapled Units on either exchanges (as determined by
individual Unitholders).
Section 2 Vital
following
implementation
of the Proposal
- “Dual listed
structure and
waivers”

What are the conditions
to the Proposal being
implemented?
The Proposal is conditional on the following conditions being satisfied:
• The Proposal being approved by Unitholders by Special
Resolution (i.e., approval by Unitholders with a combined value of
not less than 75% of the value of the VHPT Units held by those
persons who are entitled to vote and who vote on the question);
• ASIC granting the Responsible Entity an appropriate Australian
financial services licence (an AFSL) to provide certain financial
services and to operate Vital Australia as a managed investment
scheme registered under the Corporations Act;
• ASIC registering Vital Australia as a managed investment
scheme under the Corporations Act and the Registrar of
Financial Service Providers registering Vital NZ as a managed
investment scheme under the FMC Act;
•
Inland R
evenue issuing a product ruling confirming that the
distributions arising from step 3 and 4 of the Restructuring
(referred to above) will be excluded income to Unitholders for
New Zealand tax purposes;
•
Ne
w South Wales and Victorian Offices of State Revenue issuing
rulings confirming the availability of the relevant stamp duty
exemption in relation to step 4 of the Restructuring which is
outlined in Section 3;
•
The Proposal being able to be implemented on or prior to 30
June 2020;
•
The NZX accepting an application for Vital NZ to be listed on the
NZX Main Board;
• The Manager and Vital’s lenders agreeing the necessary
implementation steps and required amendments to the Facility
Agreement to give effect to the Restructuring (to date the
lenders have provided approval in principle);
•
There being no legal impediment to the implementation of the
R
estructuring; and
•
The Board remaining satisfied that the Proposal is in the bes
t
interests of Unitholders.
If these conditions have been satisfied, the Board will determine the
dates over which the Restructuring will be implemented.
The Board’s current expectation is that the conditions will be satisfied
in time to allow for the Restructuring to be implemented in May/
June 2020. The Manager will notify Unitholders of the timing for
implementation by NZX announcement.
Section 3 Details of
the Restructuring
When will the
Restructuring be
implemented?
The timetable for implementing the Restructuring will be determined
by the Manager, taking into account the timing of the satisfaction
of the conditions. The Restructuring is expected to be able to be
implemented in May/June 2020 and must be implemented no later
than 30 June 2020 in order to ensure that the benefits outlined in the
Notice of Meeting are achieved.
The Manager will provide updates as the steps of the Restructuring
are implemented via the NZX market announcements platform.
Key Dates
How much do I have
to pay for the Vital NZ
Units?
No consideration is required to be paid by Unitholders under the
Proposal. If the Proposal is implemented, Vital NZ Units will be
distributed to Unitholders for no consideration.
This is because the Proposal does not involve changing either (1)
VHPT’s underlying property assets, which are being split between Vital
NZ and Vital Australia; or (2) a Unitholder’s proportionate beneficial
interests in those underlying assets. For example, a Unitholder
who owns 1% of all VHPT Units on issue has a corresponding 1%
proportionate beneficial interest in VHPT’s assets. Following the
Restructuring, the Unitholder would have one percent of the Vital NZ
Units and one percent of the Vital Australia Units, giving them a one
percent proportionate beneficial interest in the assets of Vital NZ and
Vital Australia, being the same assets owned by VHPT prior to the
Restructuring.
Section 3 Details of
the Restructuring
ANSWERS TO KEY QUESTIONS 13

14 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
What is this going to
cost to complete the
Proposal?
Transaction costs associated with implementing the Proposal are
estimated to be NZ$8m
3
or 0.4% of total assets, and are driven by
the detailed evaluation and preparation process for the Proposal.
This includes tax and legal advice across jurisdictions and for a range
of regulators, financial and accounting advice, independent adviser
review, upfront ASX listing fee and other miscellaneous costs.
The majority of these transaction costs will be capitalised if the
Proposal is approved and will not impact distributions.
The Manager and its related parties are not being paid any work fees,
project fees or otherwise for any services provided in connection
with the Proposal. On an ongoing basis, the Proposal will result in
some additional ongoing costs for Vital associated with operating the
Stapled Group, as well as annual ASX listing costs of approximately
A$90,000.
The implementation of the Proposal is conditional on certain tax
rulings being obtained. Assuming that these are obtained as applied
for, there will be no stamp duty or capital gains tax associated with
the Restructuring.
Separately, the Proposal will involve the close-out of Vital’s full
existing interest rate swaps portfolio which will involve Vital incurring
a significant one-off close-out cost (estimated to be approximately
NZ$50m) to be funded from its debt facilities (albeit this is expected to
provide a benefit to Vital through lower interest going forward).
The cost of the close out of the interest rate swap portfolio results in
a one-off tax deduction in the 2019/20 tax year which will be used to
offset tax liabilities that crystallise as part of the amendments to the
Facility Agreement that are required to enable the Restructuring.
Depending on the prevailing foreign exchange rates and swap rates at
the time of implementation, there is the possibility that a tax liability
may remain from the amendments to the Facility Agreements at the
date of Restructuring despite the full close out of the interest rate
swaps portfolio, although it is not currently expected to be material.
Section 3 Details of
the Restructuring
and Section 5
Financial Impacts
for Unitholders
Are Vital’s property
assets changing?
No. The Proposal does not involve changing Vital’s underlying property
assets.
GOVERNANCEWHERE TO GO
FOR FURTHER
INFORMATION
Will the Board of the
Manager change as a
result?
The Board will not change as a result of the Proposal. It is intended
that the same individuals will comprise the boards of the New Zealand
Manager (in respect of Vital NZ) and the Australian Manager (in respect
of Vital Australia).
Section 2 Vital
following
implementation
of the Proposal
- “Boards of the
Stapled Group”
Will Unitholders be able
to appoint independent
directors?
Yes. Existing rights relating to the appointment of independent
directors will continue in respect of the NZ Manager and the Australian
Manager following the implementation of the Proposal.
Section 2 Vital
following
implementation
of the Proposal
- “Boards of the
Stapled Group”
Will the Supervisor
continue to have the
same role?
After the implementation of the Proposal, the Supervisor will be the
statutory supervisor of Vital NZ, in a similar way as it is currently the
supervisor of Vital (albeit in respect of the New Zealand properties).
Although there is no equivalent to the role of the independent
Supervisor in Australia under the Corporations Act, there are legal and
governance protections for investors within the Australian framework
for managed investment schemes. Vital Australia will have governance
arrangements that satisfy those legal and governance requirements for
managed investment schemes in Australia.
Section 2 Vital
following
implementation
of the Proposal
- “Key regulatory
regimes that will
apply to Vital”
and “Australian
Governance
Arrangements”
3
Approximately NZ$1.5m of transaction costs were incurred in prior years and have been excluded from this number.

DISTRIBUTIONS AND TAXWHERE TO GO
FOR FURTHER
INFORMATION
How do I get my
distributions?
The Manager expects that Unitholders will receive one single payment
from Vital.
4
It will comprise a distribution from:
• Vital NZ Units based only on their holding of Vital NZ Units and
the earnings of Vital NZ; and
• Vital Australia Units based only on their holding of Vital Australia
Units and the earnings of Vital Australia.
The breakdown of the separate components of the distribution
payment would be provided to Unitholders, reflecting the fact that the
one payment comprises distributions from two separate legal entities.
Unless Unitholders elect otherwise:
•
Ne
w Zealand Unitholders will receive distributions in New Zealand
dollars; and
•
Aus
tralian and other offshore Unitholders will receive
distributions in Australian dollars.
The exchange rate for distributions is expected to be set on the DRP
record date.
Section 2 Vital
following
implementation
of the Proposal
- “Distribution
payment mechanics”
What will my
distributions look like
after the Proposal?
Based on illustrative FY20 analysis, the full year Gross Distribution paid
to Unitholders would increase from 8.75 cents to 11.87 cents per unit
after the Proposal. After tax paid by Unitholders, Net Distributions will
depend on the Unitholder’s marginal tax rate. For example, the full year
Net Distribution for a New Zealand Unitholder with a 30% illustrative
tax rate would increase from 8.75 cents to 9.64 cents per unit after
the Proposal (an increase of 10%). Refer to Schedule 2 for details for
Unitholders in other tax brackets.
Section 5 Financial
Impacts for
Unitholders
Schedule 2
Assumptions
Underlying the
Distributions
Analysis
When will my distribution
change?
The Restructuring is currently expected to be able to be implemented
by 30 June 2020 at the latest and, therefore, the Unitholder
distribution will first change in respect of the fourth quarter of the
financial year ending 30 June 2020. The extent of the change will
depend on how far into the fourth quarter implementation takes place.
If implementation occurred on the first day of the fourth quarter (1
April 2020), the quarterly Gross Distribution
5
would be expected to be
one quarter of 11.87 cents, or approximately 2.97 cents per unit (before
applying the payout ratio increase). In contrast, if the Proposal is
implemented on the last day of that quarter (30 June 2020) the Gross
Distribution would be expected to be approximately 2.1875 cents per
unit, consistent with the Gross Distribution for the preceding quarter.
Section 5 Financial
Impacts for
Unitholders
Will I receive the one-
off benefit in the year of
implementation?
Only New Zealand Unitholders who apply the annual FDR method will
receive the one-off benefit in the year of implementation. However, this
will not apply if New Zealand Unitholders sell their units in the year of
implementation.
Section 5 Financial
Impacts for
Unitholders
How is the distribution
policy changing?
The proposed distribution policy is to have a target payout ratio of 95-
100% of adjusted funds from operations (AFFO) with a view to aligning
Vital’s policy with what the Board considers is best practice for New
Zealand and Australian property trusts as Vital re-positions itself as a
dual-listed entity.
Under the current structure, tax payable is subject to material
fluctuations resulting from changes in exchange rates and/or capital
structure which can lead to inconsistent net income from year to year.
Accordingly, the Manager must prudently retain a larger proportion of
net income in the trust to manage cash tax payments which, in turn,
reduces the distributions the Manager is able to pay to Unitholders.
The Proposal will result in a significant reduction in tax payable at
the entity level as no tax will be payable by Vital NZ in respect of the
Australian properties, resulting in greater certainty and consistency
of net income which will enable the Manager to consistently pay out
higher distributions.
Section 2 Vital
following
implementation
of the Proposal -
“Vital’s Distribution
Policy”
Glossary for a
detailed definition of
AFFO
4
The relatively small number of Unitholders who continue to receive distributions by cheque will receive two cheques instead of a single payment.
5
One-off tax impacts from the Restructuring (including from foreign exchange rate movements, interest rate swap curve movements and other tax costs incurred as part of the Restructuring) will
be adjusted for AFFO (adjusted funds from operations) and will not impact Unitholder distributions in Q4 FY20.
ANSWERS TO KEY QUESTIONS 15

16 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
Will New Zealand
unitholders pay more
tax?
The impact of the Proposal on the Net Distributions to all New Zealand
Unitholders is expected to be positive as detailed in Section 5 and
Schedule 2.
Under the current structure, as VHPT is a PIE, tax on New Zealand
Unitholders’ investment in VHPT is effectively capped at 28% and paid
by VHPT. Under the Proposal, the New Zealand assets will still be
held via a PIE, however the Australian assets will be held through an
Australian unit trust and not a PIE. 
Accordingly, there is likely to be additional tax for those New Zealand
Unitholders with a marginal tax rate above 28% due to tax applying
at this higher tax rate on their investment in Vital Australia (either
via the FDR method or on distributions from Australia).  However, the
additional tax cost is expected to be more than offset by the benefits
from the Proposal. The Proposal is expected to result in higher
distributions after tax for New Zealand Unitholders compared to the
current structure. For example, the Net Distribution for a New Zealand
Unitholder with a 30% illustrative tax rate is expected to increase by
10% after the Proposal, based on illustrative FY20 analysis.
Section 5 Financial
Impacts for
Unitholders
VOTING AND PROCESSWHERE TO GO
FOR FURTHER
INFORMATION
What approvals are
required?
The Proposal requires approval by special resolution of Unitholders.
A special resolution means a resolution passed by Unitholders with a
combined value of not less than 75% of the value of the VHPT Units
held by those persons who are entitled to vote and who vote on the
question.
Section 9
Procedural Notes
How do I vote?
Unitholders can vote on the Proposal by:
• attending the Special Meeting in person; or
•
appointing a proxy to vote at the Special Meeting on your behalf
either online at www.investorvote.co.nz or by completing and
returning the enclosed proxy form.
Section 9
Procedural Notes
Is there a Board
recommendation?
Yes there is. The Board of the Manager unanimously recommends
that Unitholders vote IN FAVOUR of the Proposal.
Overview
Has the Supervisor
provided a comment?
Yes. Please refer to Schedule 4 to review the Supervisor’s comment on
the Proposal.
Schedule 4
Supervisor letter
to Unitholders
regarding the
Special Resolution
What did the Independent
Adviser conclude?
Unitholders are encouraged to read the report from Grant Samuel, as
Independent Adviser, which supports the Board’s recommendation that
Unitholders vote in favour of the Proposal.
Grant Samuel were selected based on their strong reputation as an
independent adviser.
Schedule 1
Independent
Adviser Report
What if the Proposal is
not approved?
If Unitholders do not approve the Proposal by the required special
resolution, the Proposal will not be implemented. Vital will continue to
have the same structure as it currently does.
If the Proposal does not proceed, costs incurred to date relating to the
development of the Proposal will be written off.
More significantly, Vital will not benefit from the anticipated
advantages of the Proposal described in this Notice of Meeting. In
particular, Vital will not be dual listed on the ASX as well as the NZX
and its sources of equity capital will continue to largely be centred
in New Zealand. The anticipated reduction in Vital’s cost of capital as
a result of the implementation of the Proposal will not be realised,
meaning that Vital will be less competitively positioned for investment
opportunities than it would be if the Proposal was implemented.
Section 4
Advantages and
disadvantages

What if I vote against
the Proposal but it is
approved?
If the Proposal is approved by Unitholders by way of special resolution,
and is subsequently implemented, it will be binding on all Unitholders,
including those that voted against the Proposal. If the Proposal is
approved but you do not want to continue to invest in Vital following
the implementation of the Proposal, you can sell your units on the NZX
in the normal way. In addition, you may be able to sell your units on the
ASX. The price you can sell your units for will depend on the market
price at the time, and assumes that there are willing purchasers of
units at that time.
Section 9
Procedural Notes
Is the Manager able to
vote?
The Manager cannot vote on the Proposal as a result of the restrictions
in section 163 of the FMC Act. This restriction also extends to the
Manager’s “associated persons” (as defined in the FMC Act), including
NorthWest and all of the directors of the Manager.
This restriction does not apply where they are casting a vote as a proxy
for a person who is entitled to attend and vote at the meeting where
they are given an express direction to vote. However, if the Manager, its
associated persons or any of their directors or officers are appointed
as a proxy by a Unitholder but are not directed how to vote on the
Proposal, they will not be able to vote that Unitholder’s units and will
abstain in respect of those units. Therefore, if you intend to appoint
a director of the Manager as proxy, please direct them on how
to vote. If you do not provide a voting direction, the voting
restrictions will apply and the director will not be able to cast
your vote.
Section 9
Procedural Notes
How do I complain?
Complaints may be made to the Manager or the Supervisor at the
contact details set out in the Directory below. In addition, as a financial
service provider registered under the Financial Service Providers
(Registration and Dispute Resolution) Act 2008, the Manager is a
member of an approved dispute resolution scheme (registration
number FSP33302) to which complaints may be made.
Insurance & Financial Services Ombudsman Scheme Inc.
Level 2, Solnet House, 70 The Terrace, Wellington 6143
Freephone: 0800 888 202 (if calling from New Zealand)
Telephone: +64 4 499 7612
Email: info@ifso.nz
There will be no fee charged to any complainant in connection with
investigation or resolution of a complaint.
ANSWERS TO KEY QUESTIONS 17
Lingard Private Hospital, Newcastle, Australia.

18 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
2. Vital following implementation
of the Proposal
Vital - the Stapled Group
Following the implementation of the Proposal, Vital
will comprise the Stapled Group, being:
• Vital NZ, a New Zealand domiciled managed
investment scheme registered under Part 4 of
the FMC Act that will hold the NZ Properties;
and
•
Vital Australia, an Australian domiciled
managed investment scheme registered under
chapter 5C of the Corporations Act that will
hold the Australian Properties (and subsidiaries
of Vital Australia).
The Stapled Group will trade as “Vital Healthcare
Property”.
Vital NZ and Vital Australia will have the same
number of units on issue, and Unitholders will hold
the same number of Vital NZ Units as they hold Vital
Australia Units. The Vital NZ Trust Deed, the Vital
Australia Trust Deed and the Stapling Deed will
include provisions that give effect to the Stapling of
the Vital NZ Units and the Vital Australia Units. This
means that the units will be linked together so that
they must be traded together. Vital NZ Units and
Vital Australia Units will be quoted together on the
NZX Main Board and ASX as a “Stapled Unit”.
If the Proposal is approved, Unitholders will not need
to take any further steps to become Unitholders of
the Stapled Group.
Currently, Unitholders receive distributions from
VHPT. Following the Restructuring, Unitholders
would continue to receive one payment, but it will
comprise an aggregate of a distribution from each
of Vital NZ and Vital Australia
6
. Further detail about
the distributions from the Stapled Group is provided
below under “Distribution Payment Mechanics”.
Unitholders should review this information as well
as the information contained in Section 5 Financial
Impacts for Unitholders as part of their consideration
of the Proposal.
The following table sets out a comparison of the key
features of VHPT in its current form and the Stapled
Group.
CURRENT VHPT STAPLED GROUP
Listing
Listed on NZX Main BoardListed on NZX Main Board and ASX
Ticker
VHPVHP
Listing Rules
NZX Listing RulesNZX Listing Rules
ASX Listing Rules (to the extent applicable to
a foreign exempt listing)
Type of security
One ordinary unit in VHPOne Stapled Unit, being one ordinary unit
in Vital NZ and one ordinary unit in Vital
Australia
Transferability
Freely transferableFreely transferable (subject to the stapling
restrictions which require the Stapled Units to
be traded together)
Distributions
One payment from VHPT onlyOne payment comprising aggregated
distributions from Vital NZ and Vital Australia
CURRENT VHPT STAPLED GROUP
Voting
One vote per VHPT UnitOne vote per Vital NZ Unit on Vital NZ
resolutions
One vote per Vital Australia Unit on Vital
Australia resolutions
6
The relatively small number of Unitholders who continue to receive distributions by cheque will receive two cheques instead of a single payment.

CURRENT VHPT STAPLED GROUP
Management
Managed externally by the
Manager, being an indirect
wholly-owned subsidiary of
NorthWest REIT
Vital NZ and Vital Australia will both be
externally managed by indirect wholly-owned
subsidiaries of NorthWest REIT.
•

Vital NZ will be managed b
y the New
Zealand Manager; and
•
Vital Aus
tralia will be managed by the
Australian Manager on a day-to-day basis,
which will provide strategic, operational
and administrative services under an
investment management agreement with
the Responsible Entity.
Board of Directors
The Board of the Manager with
the following Directors:
•
Bernard Crot
ty
(Non-executive Chair)
•
Andre
w Evans
(Independent Director)
•
Gr
aham Stuart
(Independent Director)
•
Dr Michael S
tanford
(Independent Director)
•
P
aul Dalla Lana
(Non-executive Director)
The Board has committed to
appoint an independent chair
before the 2020 annual general
meeting.
Two separate manager Boards, each with the
same directors, being the same as the current
Board:
•
Bernard Crotty (Non-executive Chair)
•

Andre
w Evans (Independent Director)
• Graham Stuart (Independent Director)
• Dr Michael Stanford (Independent
Director)
• Paul Dalla Lana (Non-executive Director)
The Board has committed to appoint an
independent chair before the 2020 annual
general meeting.
There will be a separate board for the
Responsible Entity which will initially
comprise the following NorthWest executives
based in Australasia:
•
Craig Mitchell
•
Miles W
entworth
•
Aaron Hockl
y
Vital Fund Manager
Aaron HocklyAaron Hockly
Vital Chief Financial Officer
Michael GrothMichael Groth
Annual meetings
Once per year (November/
December)
Combined meeting to be held once per year
before 31 December. Formal business for
Vital NZ and Vital Australia to be addressed
consecutively. It is currently anticipated that
annual meetings will be held in NZ, although
some may be held in Australia in the future.
Annual Reports
Once per year (September), as
well as a second compliance
annual report in a format
required by the FMC Act.
Combined annual report to be issued once
per year (September), as well as separate
compliance annual reports for Vital NZ and
Vital Australia to the extent required by law.
VITAL FOLLOWING IMPLEMENTATION OF THE PROPOSAL 19

20 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
CURRENT VHPT STAPLED GROUP
Financial Reporting
Consolidated financial
statements for VHPT and
entities controlled by it.
Consolidated financial statements would be
prepared for the Stapled Group. To the extent
required by law, financial statements would
also be prepared for:
•
Vital NZ and entities controlled by it; and
•
Vital Australia and entities controlled by it,
However, applications have been made to
both the FMA and ASIC for relief from the
need to file standalone financial statements
for Vital NZ and Vital Australia.

Trust Deed Borrowing
restriction
50% of VHPT’s gross value
(including the proceeds of any
proposed borrowing)
50% of the Stapled Group’s gross value
(including the proceeds of any proposed
borrowing)
Boards of the Stapled Group
If the Proposal is approved and implemented, Vital (as the Stapled Group) will be at all times governed and
managed by the respective Boards of:
• the New Zealand Manager (in the case of Vital NZ); and
• the Australian Manager (in the case of Vital Australia).
It is intended that the Boards of the New Zealand Manager and the Australian Manager will each comprise the
same members. Further details about the Australian governance arrangements are described below under
Australian Governance Arrangements.
This structure recognises the importance of alignment of the Boards where Unitholders have a single economic
investment in Stapled Units and will provide the Stapled Group with the benefit of the specialised experience and
capability of the current Board of the Manager.
The Stapling Deed, which will be entered into between the NZ Manager (as manager of Vital NZ), the Responsible
Entity (as responsible entity of Vital Australia) and the Australian Manager (as investment manager of Vital
Australia) provides that to the maximum extent permitted by law and having regard to tax considerations in
Australia and New Zealand, the NZ Manager and the Australian Manager must cooperate with each other and do
all things reasonably necessary to ensure that, to the maximum extent possible, each of the NZ Manager and the
Australian Manager have common directors.
Unitholders currently have the right to appoint two independent directors to, and remove those directors from,
the board of the Manager. To reach an equivalent position after the Restructuring, Unitholders will have the right
to appoint and remove two individuals to be independent directors on the Boards of both the NZ Manager and the
Australian Manager. In the case of the Australian Manager, this will be given effect by Unitholders directing the
Responsible Entity, and the Responsible Entity exercising its contractual right under the Investment Management
Agreement to require that the Australian Manager take all necessary steps to appoint or remove the nominated
individuals from the board of the Australian Manager.
The Manager believes that the dual-Board structure of the Stapled Group is appropriate in the case of Stapled
Units. The proposed Board structure is essential to reflect the intention that the Stapled Group operates as a
single economic entity.
The Stapled Group will have experienced and balanced Boards. Its members collectively contribute a diverse
range of skills and backgrounds, including executive and governance roles at various real estate investment
businesses and publicly listed entities.
The Boards currently comprise three independent non-executive directors and two NorthWest representatives.
The biographical details of the members of the Boards are set out below.

BERNARD CROTTY
Director and Chair
Bernard Crotty is the President and a Trustee of NorthWest Healthcare Properties REIT
and a Director of the Manager of Vital Healthcare Property Trust and previously served
as President and Trustee of NorthWest International Healthcare Properties REIT.
Previously, Bernard acted as Chairman and/or Chief Executive Officer of Certicom
Corp., a provider of cryptographic software and services that was acquired by the then
Research in Motion Ltd and Chairman and/or Chief Executive Officer of Comnetix Inc., a
provider of biometric identification and authorisation solutions that was acquired by L-1
Identity Solutions, Inc.
In addition, Bernard has served on a variety of public company boards and was counsel to
the law firm Gibson, Dunn & Crutcher LLP in Los Angeles and a partner at the law firm
McCarthy Tétrault, LLP in Toronto and London, England.
Bernard received his BA from the University of Alberta, LL.B. from the University of
Toronto, LL.M. from the London School of Economics and his MBA from Duke University.
He is also a graduate of the Toronto ICD-Rotman Directors Education Program.
ANDREW EVANS
Independent Director
Andrew Evans has over 25 years’ experience in commercial real estate and asset
management, previously holding executive positions in listed and unlisted real estate
investment businesses. Andrew is Chairperson of Accessible Properties NZ Limited and
Infinity Investment Group Holdings Limited, is a Director of Holmes Group Limited, Holmes
GP Fire Limited and Trust Investments Management Limited, and is a former director of
Argosy Property Limited. In addition, Andrew is a past National President of the Property
Council of New Zealand, a fellow of the New Zealand Property Institute, and a government
appointee to the Land Valuation Tribunal (Waikato No.1). He is a Chartered Fellow of the
Institute of Directors of New Zealand and is on the Auckland Branch Committee.
Andrew has a Bachelor of Business Studies and MBA (with distinctions) from Massey
University and a Diploma in Finance from Auckland University.
GRAHAM STUART
Independent Director
Graham Stuart is an experienced corporate director with an established track record of
performance in governance and in prior executive roles. He is currently the Independent
Chairman of EROAD Limited and an Independent Director and Chair of the Audit
Committee at Tower, and an Independent Director of Metro Performance Glass. He
served for 7 years as the Chief Executive Officer of Sealord Group and prior to that was
Director, Strategy and Growth and Chief Financial Officer of Fonterra Co-operative Group.
Graham is a Fellow of Chartered Accountants Australia & New Zealand (CAANZ).
Graham has a Masters of Science from Massachusetts Institute of Technology and a
Bachelor of Commerce with first class honours from the University of Otago.
The Board
ANDREW EVANS
Independent Director
Andrew Evans has over 25 years’ experience in commercial real estate
and asset management, previously holding executive positions in listed
and unlisted real estate investment businesses. Andrew is a Director of
Holmes Group Limited, Holmes GP Fire Limited, Trust Investments
Management Limited and Hughes and Cossar Group Holdings Limited and
a former director of Argosy Property Limited. In addition, Andrew is a past
National President of the Property Council of New Zealand, a fellow of the
New Zealand Property Institute, and a government appointee to the Land
Valuation Tribunal (Waikato No.1). He is a Chartered Fellow of the Institute
of Directors and is on the Auckland Branch Committee.
Andrew has a Bachelor of Business Studies and MBA (with distinctions)
from Massey University and a Diploma in Finance from Auckland University.
22
VITAL HEALTHCARE PROPERTY TRUST ANNUAL REPORT 2019
BERNARD CROTTY
Director
Bernard Crotty is the President and a Trustee of NorthWest Healthcare
Properties REIT and a Director of the manager of Vital Healthcare
Property Trust and previously served as President and Trustee of
NorthWest International Healthcare Properties REIT.
Previously, Bernard acted as Chairman and/or Chief Executive Officer
of Certicom Corp., a provider of cryptographic software and services
that was acquired by the then Research in Motion Ltd. And Chairman
and/or Chief Executive Officer of Comnetix Inc., a provider of biometric
identification and authorization solutions that was acquired by L-1
Identity Solutions, Inc.
In addition Bernard has served on a variety of public company boards and
was counsel to the law firm Gibson, Dunn & Crutcher LLP in Los Angeles
and a partner at the law firm McCarthy Tétrault, LLP in Toronto and
London, England.
Bernard received his B.A. from the University of Alberta, LL.B. from
the University of Toronto, LL.M. from the London School of Economics
and his M.B.A. from Duke University. He is also a graduate of the Toronto
ICD-Rotman Directors Education Program.
The Board
ANDREW EVANS
Independent Director
Andrew Evans has over 25 years’ experience in commercial real estate
and asset management, previously holding executive positions in listed
and unlisted real estate investment businesses. Andrew is a Director of
Holmes Group Limited, Holmes GP Fire Limited, Trust Investments
Management Limited and Hughes and Cossar Group Holdings Limited and
a former director of Argosy Property Limited. In addition, Andrew is a past
National President of the Property Council of New Zealand, a fellow of the
New Zealand Property Institute, and a government appointee to the Land
Valuation Tribunal (Waikato No.1). He is a Chartered Fellow of the Institute
of Directors and is on the Auckland Branch Committee.
Andrew has a Bachelor of Business Studies and MBA (with distinctions)
from Massey University and a Diploma in Finance from Auckland University.
22
VITAL HEALTHCARE PROPERTY TRUST ANNUAL REPORT 2019
BERNARD CROTTY
Director
Bernard Crotty is the President and a Trustee of NorthWest Healthcare
Properties REIT and a Director of the manager of Vital Healthcare
Property Trust and previously served as President and Trustee of
NorthWest International Healthcare Properties REIT.
Previously, Bernard acted as Chairman and/or Chief Executive Officer
of Certicom Corp., a provider of cryptographic software and services
that was acquired by the then Research in Motion Ltd. And Chairman
and/or Chief Executive Officer of Comnetix Inc., a provider of biometric
identification and authorization solutions that was acquired by L-1
Identity Solutions, Inc.
In addition Bernard has served on a variety of public company boards and
was counsel to the law firm Gibson, Dunn & Crutcher LLP in Los Angeles
and a partner at the law firm McCarthy Tétrault, LLP in Toronto and
London, England.
Bernard received his B.A. from the University of Alberta, LL.B. from
the University of Toronto, LL.M. from the London School of Economics
and his M.B.A. from Duke University. He is also a graduate of the Toronto
ICD-Rotman Directors Education Program.
23
GRAHAM STUART
Independent Director
Graham Stuart is an experienced corporate director with an established
track record of performance in governance and in prior executive roles.
He is currently the Independent Chairman of EROAD Limited and an
Independent Director and Chair of the Audit Committee at Tower.
He was previously the CEO of Sealord Group from 2007 to 2014 and
Director, Strategy and Growth and CFO of Fonterra Co-operative Group
from 2001 to 2007.
Graham is a Fellow of Chartered Accountants Australia & New Zealand
(CAANZ) and a Chartered Member of the New Zealand Institute of
Directors. Graham has a Masters of Science from Massachusetts Institute
of Technology and a Bachelor of Commerce from the University of Otago.
PAUL DALLA LANA
Director
Paul Dalla Lana is the founder and CEO of NorthWest Healthcare Properties
REIT – the 100% owner of NorthWest Healthcare Properties Management
Limited, the Manager of Vital Healthcare Property Trust. Over the past
25 years, Paul has led NorthWest in the acquisition and development
of over $7.0 billion worth of real estate transactions, with a significant focus
on healthcare properties.
Prior to founding NorthWest, Paul was a professional in the Real Estate
Capital Markets Group of Citibank, N.A. and an economist with B.C. Central
Credit Union. Paul received his BA (Economics) and his MBA (Finance and
Real Estate) from The University of British Columbia.
Paul serves as Chairman of the Board of NorthWest Healthcare Properties
REIT. Additionally, he is actively involved in addressing public health and
education issues in Canada and around the world. He is an Advisory Board
member of the Dalla Lana School of Public Health and on the President’s
Advisory Council at the University of Toronto.
VITAL FOLLOWING IMPLEMENTATION OF THE PROPOSAL 21

22 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
DR MICHAEL STANFORD AM
Independent Director
Michael Stanford is an experienced Non-Executive Director (“NED”) and health services
advisor having moved into NED roles following a distinguished 30 year senior executive
career in the health care sector, including 23 years in Group Chief Executive Officer roles
across the private and public health sectors.
His current Board roles include:
•
Vir
tus Health (ASX:VRT), the market leading provider of Assisted Reproductive
Services in Australia, Ireland and Denmark, with a growing presence in the UK and
Singapore; and
• Nucleus Networks, the first global, multi-site, early phase clinical trial organisation
with facilities in Australia and the USA. Nucleus Networks is owned by the private
equity group Crescent Capital Partners.
In the last 3 years Michael’s other Board roles have been with Healthscope (ASX:HSO),
Australia’s second largest hospital group with 43 facilities, which was acquired by
Brookfield Private Equity in June 2019, and Australian Clinical Laboratories, Australia’s
third largest diagnostic services provider (private equity owned).
Previous Board roles have included health and aged care related industry associations
(CHA, VHA), higher education institution (Curtin University), community leadership
group (Leadership WA), Government bodies (National Health Performance Authority,
Health Workforce Australia), aged care (St Ives Group), community care (RDNS), health
promotion (Turning Point), For Purpose Mutuals (RACWA Holdings) and in arts advocacy
(WA Chamber of Arts and Culture).
In 2018 Michael was awarded a Member of the Order of Australia for significant
service to the health sector through executive roles, to tertiary education and the
WA community. In 2010 he received the WA Citizen of the Year Award – Industry and
Commerce category.
PAUL DALLA LANA
Director
Paul Dalla Lana is the founder and Chief Executive Officer of NorthWest Healthcare
Properties REIT – the 100% owner of NorthWest Healthcare Properties Management
Limited, the Manager of Vital Healthcare Property Trust. Over the past 25 years, Paul has
led NorthWest in the acquisition and development of over $7.0 billion worth of real estate
transactions, with a significant focus on healthcare properties.
Prior to founding NorthWest, Paul was a professional in the Real Estate Capital Markets
Group of Citibank, N.A. and an economist with B.C. Central Credit Union. Paul received
his BA (Economics) and his MBA (Finance and Real Estate) from The University of British
Columbia.
Paul serves as Chairman of the Board of NorthWest Healthcare Properties REIT.
Additionally, he is actively involved in addressing public health and education issues in
Canada and around the world. He is an Advisory Board member of the Dalla Lana School
of Public Health and on the President’s Advisory Council at the University of Toronto.
23
GRAHAM STUART
Independent Director
Graham Stuart is an experienced corporate director with an established
track record of performance in governance and in prior executive roles.
He is currently the Independent Chairman of EROAD Limited and an
Independent Director and Chair of the Audit Committee at Tower.
He was previously the CEO of Sealord Group from 2007 to 2014 and
Director, Strategy and Growth and CFO of Fonterra Co-operative Group
from 2001 to 2007.
Graham is a Fellow of Chartered Accountants Australia & New Zealand
(CAANZ) and a Chartered Member of the New Zealand Institute of
Directors. Graham has a Masters of Science from Massachusetts Institute
of Technology and a Bachelor of Commerce from the University of Otago.
PAUL DALLA LANA
Director
Paul Dalla Lana is the founder and CEO of NorthWest Healthcare Properties
REIT – the 100% owner of NorthWest Healthcare Properties Management
Limited, the Manager of Vital Healthcare Property Trust. Over the past
25 years, Paul has led NorthWest in the acquisition and development
of over $7.0 billion worth of real estate transactions, with a significant focus
on healthcare properties.
Prior to founding NorthWest, Paul was a professional in the Real Estate
Capital Markets Group of Citibank, N.A. and an economist with B.C. Central
Credit Union. Paul received his BA (Economics) and his MBA (Finance and
Real Estate) from The University of British Columbia.
Paul serves as Chairman of the Board of NorthWest Healthcare Properties
REIT. Additionally, he is actively involved in addressing public health and
education issues in Canada and around the world. He is an Advisory Board
member of the Dalla Lana School of Public Health and on the President’s
Advisory Council at the University of Toronto.

Management team
The Stapled Group will have the benefit of the Manager’s existing senior management team, which reports to
Craig Mitchell, the Chief Executive Officer of NorthWest Australia and New Zealand.
The senior management team comprises of Aaron Hockly, Michael Groth, Chris Adams, Richard Roos and
Vanessa Flax.
The biographical details of the members of the senior management team are set out below.
CRAIG MITCHELL
Chief Executive Officer Australia and New Zealand
Craig has more than 20 years’ experience specialising in the property industry. Prior to
joining NorthWest he was Chief Executive Officer of Grocon, Australia's most recognised
private construction company. His previous roles include Executive Director and Chief
Operating Officer of Dexus Property Group, an ASX listed Top 50 Company.
Craig is the Chief Executive Officer, Australia and New Zealand for NorthWest, having
joined the group in 2018. He has overall accountability for the Australian and New
Zealand portfolios including strategy and performance and leading the team of over 40
real estate professionals.
Craig has a Masters of Business Administration (Executive) from the Australian Graduate
School of Management, a Bachelor of Commerce and is a Fellow of CPA Australia. He
has also completed the Advanced Management Program at Harvard University, Boston.
AARON HOCKLY
Fund Manager - Vital
Aaron Hockly has over 19 years’ experience in property, corporate governance, financial
services and commercial/corporate law obtained in corporate and advisory roles in
Australia, New Zealand and the UK. His previous executive experience includes 9 years
as an executive (including being Chief Operating Officer) for a large ASX-listed property
group, Growthpoint Properties Australia (ASX:GOZ).
Aaron was appointed Fund Manager of Vital Healthcare Property Trust in late 2019 and
has overall responsibility for the management and operation of Vital.
Among other qualifications and certifications, Aaron has a Masters in Applied Finance, is
a Fellow of Governance New Zealand, is a Senior Associate of FINSIA, and is a member of
the Institute of Directors (NZ).
MICHAEL GROTH
Chief Financial Officer Australia and New Zealand
Michael Groth has over 13 years’ experience as a senior finance executive in the listed
and unlisted property funds and funds management industry. Prior to joining the team in
October 2019, Michael’s most recent position was as Group Chief Financial Officer of the
Melbourne based and ASX-listed real estate fund manager, APN Property Group Limited.
Michael has extensive experience in financial management and reporting, taxation,
treasury and capital management, corporate structuring, acquisitions, disposals and
equity raisings.
Michael holds a Bachelor of Commerce and Bachelor of Science and has been a member
of the Chartered Accountants Australia and New Zealand since 2000.
VITAL FOLLOWING IMPLEMENTATION OF THE PROPOSAL 23

24 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
CHRIS ADAMS
Executive Director – Projects
Chris Adams has extensive experience in the property industry in Australia, New
Zealand and the United Kingdom, including over 20 years’ experience in health sector
property acquisitions, transaction structuring and large scale hospital development.
Responsibilities with respect to NorthWest include overseeing development management
and joint responsibility for acquisitions undertaken by the business. He was one of the
founding Executives at Generation Healthcare REIT. Prior to joining Generation, Chris
established Vital’s presence in Australia in 1999 and served as General Manager –
Australia following various roles with the group in New Zealand.
Chris holds a Bachelor of Property from Auckland University.
RICHARD ROOS
Executive Director – Portfolio
Richard Roos moved to Melbourne with his family to join Vital six years ago after
spending the previous six years in a senior executive role with NorthWest Healthcare
Properties REIT. He has over 20 years’ career experience in commercial real estate
financing, acquisitions and property management.
In his role as Executive Director, Richard is responsible along with his Melbourne
and Auckland based teams for the asset management of Vital’s Australian and New
Zealand portfolio, including leasing and tenant relationships, and joint responsibility for
acquisitions undertaken by the business.
VANESSA FLAX
Regional General Counsel ANZ and Company Secretary
Vanessa joined the team on 1 May 2019, prior to which she was a special counsel at
Ashurst Australia.
Vanessa has 25 years of deep and broad ranging property law experience in Australia and
NZ, including acting (for approximately 15 years) for Vital and NorthWest.
Vanessa's experience covers all aspects of real property transactions, including
acquisitions, divestments and sales, leasing and Crown leasing, development
transactions and due diligence.
CHRIS ADAMS
Executive Director – Projects
Chris Adams has extensive experience in the property industry in
Australia, New Zealand and the United Kingdom, including over 20 years’
experience in health sector property acquisitions, transaction structuring
and large scale hospital development. Responsibilities with respect
to NorthWest include overseeing development management and joint
responsibility for acquisitions undertaken by the business. He was one
of the founding Executives at Generation Healthcare REIT. Prior to joining
Generation, Chris established Vital’s presence in Australia in 1999 and
served as General Manager – Australia following various roles with the
group in New Zealand.
Chris holds a Bachelor of Property from Auckland University.
RICHARD ROOS
Executive Director – Portfolio
Richard Roos moved to Melbourne with his family to join Vital six years
ago after spending the previous six years in a senior executive role
with NorthWest Healthcare Properties REIT. He has over 20 years’
career experience in commercial real estate financing, acquisitions
and property management.
In his role as Executive Director, Richard is responsible along with his
Melbourne and Auckland based teams for the asset management of
Vital’s Australian and New Zealand portfolio, including leasing and
tenant relationships, and joint responsibility for acquisitions undertaken
by the business.
25
The Stapled Group’s strategy
The Proposal does not involve changing the Manager’s
strategy for Vital. As the Stapled Group, Vital will seek
to further build on its position as Australia and New
Zealand’s leading healthcare property fund by delivering:
•

at
tractive risk adjusted returns;
• a scaled and diversified portfolio of quality property;
and
•
bes
t practice specialist risk management.
The NorthWest management platform (comprising the
New Zealand Manager and the Australian Manager)
will seek to grow Vital by continuing to develop
leading management expertise in healthcare property;
expanding our deep understanding of healthcare tenants
and their businesses; and continuing to develop long
term tenant partnerships to the benefit of both parties.
The Manager will implement the clear and carefully
constructed strategy for Vital which looks to extract the
benefits of a defensive non-cyclical healthcare property
sector and the associated market trends, including:
•

ageing and gro
wing population: supporting overall
healthcare sector growth, including a clear positive
impact on the aged care sector;
•
technology: creating more heal
thcare solutions;
•
oper
ator consolidation: whilst more advanced
across hospital operators, is at an early stage in
aged care sector and could open up portfolio sale
and leasebacks;
•
increased heal
thcare funding needs: creates a
backlog in capital investment for the operator and
opens up investment opportunities; and
•

shift out of hospital and shor
ter hospital stays:
opening up opportunities in other sectors such as
day surgeries and life sciences.

The Manager will focus on a number of key strategies
for Vital including:
• expanding key operator relationships for long
term tenant partnerships and to secure future
investment opportunities;
•
a focus on quality for operator businesses;
building design and construction; and location, to
reduce redundancy risk;
•
implementing the development pipelines for Vital
NZ and Vital Australia to enhance returns and
portfolio quality;
•
focusing on preferred medical precincts anchored
by public hospitals, which provide opportunity
for investment security and growth. Investment
in these precincts will include existing, re-
positioning and development assets;
•
increasing allocation to other healthcare sectors
including aged care, co-located medical office
buildings and life sciences facilities to further
enhance portfolio and tenant diversity; and
•
divesting non-core assets which are sub-scale
and where value has been maximised.
Overall, the Manager’s key strategic initiatives for Vital
are intended to further:
• enhance portfolio investment returns within
acceptable risk parameters;
•

enhance por
tfolio and tenant diversification; and
•
impro
ve portfolio scale and quality.
Statements of Investment Policy and
Objectives
As noted above, the Proposal does not involve
changing the Manager’s strategy for Vital. The details
of Vital’s investment strategy are currently set out in
its Statement of Investment Policy and Objectives (its
“SIPO”).
Following the implementation of the Restructuring,
Vital NZ and Vital Australia will each have separate
SIPOs. In both cases, they will be consistent with
Vital’s current SIPO, subject to the fact that:
•

Vital NZ’
s investments will focus on New
Zealand; whereas
•
Vital Aus
tralia’s investments will focus on
Australia.
Management Fees
The Proposal does not involve changing the
management fees approved by Unitholders in 2019.
To clarify and reflect the effect of the structural
changes associated with the Restructuring, certain
amendments are required to the provisions regarding
management fees in order to preserve the economic
position approved by Unitholders in 2019. These will
be set out in a combination of:
•

the Vital NZ T
rust Deed; and
•
the Vital Australia Trust Deed and Investment
Management Agreement.
The effect of these provisions is as follows:
•
the 1.75% per annum cap on the base fee,
incentive fee and activity fees is currently
calculated using the gross value of VHPT’s
assets. In order to achieve the same effective
position following the Restructuring, it will be
calculated using the gross value of the Stapled
Group’s assets and will apply in aggregate across
Vital NZ and Vital Australia;
•

the base fee is currentl
y calculated using
the gross value of VHPT’s assets. In order to
achieve the same effective position following
the Restructuring, it will be calculated using the
gross value of the Stapled Group’s assets and
apportioned between Vital NZ and Vital Australia
based on the gross value of their respective
assets;
•
the incentive fee is currently calculated based
on the growth of the net asset value of VHPT’s
assets. In order to achieve the same effective
position following the Restructuring, it will
be calculated using the growth in the net
asset value of the Stapled Group’s assets and
apportioned between Vital NZ and Vital Australia
based on their respective NTA. The “Three
Year High Watermark” provisions will apply in
the same way across the Stapled Group. The
calculation of any Incentive Fee for any financial
year involves determining a rolling average of
Vital’s NTA over a three year period. To the extent
required for these purposes, when calculating
the average NTA increase for the Stapled Group,
the NTA for financial years ending prior to 30
June 2020 will be the NTA of VHPT as would
have been calculated prior to the Restructuring
and adjusted to exclude any impact arising
from implementation of the Proposal that is
unintended or outside the ordinary course of
business; and
•

activit
y fees and additional costs are payable in
respect of specific services relating to underlying
properties. The relevant provisions will be
replicated for Vital NZ and Vital Australia and
continue to apply in the same way.
More detail of how the existing management fee
provisions will be adapted for the Stapled Group
structure is set out in Part C of Schedule 3 Summary
of Trust Deeds.
VITAL FOLLOWING IMPLEMENTATION OF THE PROPOSAL 25

26 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
Removal Fees
Given the combination of provisions in the Vital NZ Trust
Deed, Vital Australia Trust Deed and the Investment
Management Agreement, there will be no substantive
change to the formulation of the fee that would be
payable to NorthWest if Unitholders voted to remove
the NZ Manager under the FMC Act (which would also
terminate the Investment Management Agreement with
the Australian Manager) and/or the Responsible Entity
under the Corporations Act.
As part of the structural changes associated with the
Restructuring and the appointment of the Responsible
Entity and Australian Manager in respect of Vital
Australia, there is a removal fee payable to both the
Responsible Entity (in the event that Unitholders vote
to remove the Responsible Entity) and the Australian
Manager (in the event that Unitholders vote to remove
the NZ Manager under the FMC Act, which would also
terminate the Investment Management Agreement
with the Australian Manager). However, any removal
fee payable to the Responsible Entity is reduced by any
removal fee paid to the Australian Manager (and vice
versa).
Vital’s Distribution Policy
As part of the Proposal, the Manager has considered
Vital’s payout ratio policy. The payout ratio is the
percentage of income Vital pays as gross distribution to
its Unitholders.
After the implementation of the Restructuring, the
Manager intends to amend Vital’s distribution policy to
one which is based on AFFO rather than net income.
Vital’s distribution practice under the current structure
is to make distributions based on net income after
tax, without a specific target payout range and at the
Manager’s discretion. Distributions under the current
structure are impacted by tax payable at the entity level
which can be subject to material fluctuations. This can
result in inconsistency in net income from year to year
where the Manager determines that more cash needs to
be retained to manage the tax payments.
The Restructuring will result in a significant reduction
in tax payable at the entity level, resulting in greater
certainty and consistency of AFFO, which will, in
turn, enable the Manager to consistently pay higher
distributions.
After the implementation of the Restructuring, no New
Zealand tax will be payable by a Vital entity in respect
of the Australian Properties. Tax on income from the
Australian Properties will be payable by Unitholders. As
a result, Vital’s annual cash tax payments will be more
certain and easier to plan for. This is expected to mean
that Vital will be able to pay out higher distributions,
as less will need to be retained to manage cash tax
payments. Vital’s policy will be to make quarterly
distribution payments to Unitholders which target a
payout ratio of 95-100% of AFFO over the course of a
financial year.
This change in distribution policy will result in
distributions that are expected to be higher than they
would be under the current structure, and will introduce
a payout ratio policy that is aligned with what the Board
considers to be best practice for Australasian listed
property entities and will be consistent with Vital re-
positioning itself as a dual-listed entity.
The payment and amount of any future distributions will,
however, be at the discretion of the respective Boards of
the NZ Manager and the Australian Manager after taking
into account such factors as each Board deems relevant
at the time. If each Board then declares a distribution,
the Boards will coordinate as to the timing of distribution
payments and ensure that Unitholders receive a single
distribution statement (as discussed further below). Any
change in distribution policy for the Stapled Group will be
notified to holders of Stapled Units via NZX and ASX.
Distribution payment mechanics
Unitholders would separately be entitled to receive any
distributions on:
•
Vital NZ Units based onl
y on their holding of Vital NZ
Units; and
•
Vital Australia Units based only on their holding of
Vital Australia Units.
The Manager expects that Unitholders will receive
one single payment that will comprise a distribution
from each of Vital NZ and Vital Australia
7
. However, the
breakdown of the separate distribution payments would
be provided to Unitholders, reflecting the fact that the
one payment comprises distributions from two separate
trusts.
Unless Unitholders elect otherwise, Unitholders with
a registered address in New Zealand will receive
distributions in New Zealand dollars, and Unitholders
with a registered address in Australia or elsewhere
will receive them in Australian dollars. Despite the
fact that a Unitholder will receive their distributions in
a single currency, Vital NZ will declare distributions in
New Zealand dollars and Vital Australia will declare
distributions in Australian dollars. The Manager will
advise the market of the exchange to be set for the
conversion of distribution entitlements prior to the
distribution payment date.
For Unitholders who receive distributions in New Zealand
dollars, their distribution payments will comprise:
•
a distribution payment from Vital NZ, which will
have been declared by Vital NZ in New Zealand
dollars; and
7
The relatively small number of Unitholders who continue to receive distributions by cheque
will receive two cheques instead of a single payment.

• a distribution payment from Vital Australia,
which will have been declared by Vital Australia
in Australian dollars and converted into New
Zealand dollars at the exchange rate advised to
the market by the Board on the date of payment
at prevailing market rates.
The position will be reversed for Unitholders who
receive distributions in Australian dollars, as their
distribution payments will comprise:
•

a dis
tribution payment from Vital NZ, which will
have been declared by Vital NZ in New Zealand
dollars and converted into Australian dollars at
the exchange rate advised to the market by the
Board on the date of payment at prevailing market
rates; and
•
a distribution payment from Vital Australia, which
will have been declared by Vital Australia in
Australian dollars.
The taxation treatment of Vital distributions after the
Restructuring is discussed further below.
Distribution Reinvestment Plan
Vital currently has a Distribution Reinvestment Plan
which allows Unitholders who elect to participate in
that plan to receive fully paid Vital units in lieu of any
cash distribution otherwise payable to them.
The Manager’s intention is that, in connection with the
Restructuring, the Distribution Reinvestment Plan will
be updated such that it will apply to Stapled Units. This
means that, following the Restructuring, Unitholders
are expected to continue to be able to participate in the
Distribution Reinvestment Plan, albeit the distributions
that would otherwise be payable to them will be used
to subscribe for Stapled Units rather than VHPT Units.
Unitholders that have given notice electing to
participate in Vital’s existing Distribution Reinvestment
Plan will be deemed to have elected to participate
in the revised plan following the Restructuring. A
Unitholder that no longer wants to participate can give
notice withdrawing from the plan at any time.
Financial reporting
After the Restructuring, the Stapled Group would be
treated as a single consolidated group for accounting
purposes. Under accounting standards, one of the
entities in the Stapled Group must be deemed to
be ‘the parent’. It is likely that Vital Australia will be
treated as the parent of the group for this purpose.
This is because it will hold the majority of the Stapled
Group’s assets and VHPT (which will become Vital
Australia) has historically been the parent entity of the
VHPT Group. This would not mean that Vital Australia
would control Vital NZ.
The balance date of the Stapled Group would be the
same as Vital’s balance date of 30 June, and it will
continue to report on a half-year and full-year basis,
with updates at the end of first and third quarters.
After the Restructuring, the Stapled Group will
continue to be compliant with NZ GAAP for financial
reporting.
Immediately after the Restructuring, the Stapled
Group’s presentation currency will continue to be
New Zealand dollars. However, the Manager expects
that, after the Restructuring has been implemented,
the Boards will review the appropriate presentation
currency for reporting in the future, taking into
consideration a range of factors, including the relative
proportions of the Australian and New Zealand
portfolios and reducing complexity. The choice of
presentation currency is purely for reporting purposes
and will not impact distributions which will be paid in
New Zealand dollars for New Zealand Unitholders and
Australian dollars for Australian and other offshore
Unitholders.
Applications have been made to both the FMA
and ASIC for waivers from the requirement that
each of Vital NZ and Vital Australia prepare stand-
alone financial statements, given Unitholders will
consider the Stapled Group as a single economic
unit. See Section 6 Additional Information for further
information.
Foreign exchange risk management
Currently, Vital has embedded foreign currency
exposure in relation to its net investment in, and net
income from, its Australian properties as Vital reports
and makes distribution payments in New Zealand
dollars. Australian dollar borrowings in both Vital’s
New Zealand and Australian operations are used to
provide a partial ‘natural hedge’. This is supplemented
by foreign exchange derivatives in accordance with a
Board approved foreign exchange risk management
policy. These arrangements can result in realised and
unrealised foreign exchange gains or losses that can
be taxable.
Under the proposed structure, Vital NZ will have
NZ dollar borrowings and Vital Australia will have
Australian dollar borrowings, continuing to provide a
‘natural hedge’ for Unitholders while mitigating the
risk of taxable foreign exchange gains or losses arising
under the existing structure.
It is currently intended that Vital’s existing foreign
exchange risk management policies will continue to
apply in respect of distribution payments, but not in
respect to its net investment in Australian properties.
The Board periodically reviews Vital's foreign exchange
risk management policies and this policy may
change in the future if considered appropriate in the
circumstances applicable at the time.
VITAL FOLLOWING IMPLEMENTATION OF THE PROPOSAL 27

28 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
Financing arrangements
Vital’s existing lenders are supportive of the
Restructuring. They have provided approval for all
of the necessary implementation steps and required
amendments to Facility Agreements so as to allow
Vital to give effect to the Restructuring without
impacting current lending arrangements. The
required amendments include the addition of Vital
NZ as a borrower under the Facility Agreements, the
migration of VHPT, VHPL and Colma to be Australian
entities and changes in the allocation between New
Zealand dollar and Australian dollar denominated
loans. Other terms of the Facility Agreements
remain unchanged. The approval in principle of the
lenders is subject to agreeing amendments to the
facility documents necessary to implement the
Restructuring.
In addition, the approved amendments will align the
currency of the debt facilities with the borrower’s
operating currency, with a view to helping manage
the foreign exchange risk across the structure. In
short, the intention is that Vital Australia will borrow
in Australian dollars and own Australian assets, and
Vital NZ will borrow in New Zealand dollars and own
New Zealand assets.
Separately, Vital’s lenders have provided approval for
Vital to increase the total amount of facilities by A$40
million and extend the maturity date of A$200m
and NZ$20m of facilities from October 2020 to
October 2021 (A$115m) and October 2023 (A$125m
and NZ$20m). These approved amendments and
additional funding are intended to optimise Vital’s
debt facilities based on the new structure and provide
capacity for ongoing funding requirements and any
costs associated with the Proposal including interest
rate swaps being closed out as outlined in this
Notice of Meeting. The approved term extensions out
from October 2020 help remove the risk associated
with the fact that funding was due to expire in the
relatively near term. This helps improve Vital’s
overall debt expiry profile. These amendments to the
facility terms will occur regardless of whether the
Restructuring occurs.
The Board is focused on further enhancing Vital’s
existing debt funding arrangements by broadening the
mix of types of debt and its maturity profile, including
by seeking to raise debt capital through issuing bonds,
notes or otherwise accessing debt capital markets.
While this will occur irrespective of the Proposal, the
Board expects that its implementation will avoid any
adverse restructure ‘make whole’ costs and/or lender
consent requirements that are generally customary
in long term finance arrangements and, via its ASX
foreign exempt listing, increase the Stapled Group’s
profile and recognition with a broader cross section
of investors and debt providers, thereby delivering the
potential for improved debt finance terms and pricing.
Capital allocation
The Proposal is expected to provide Vital with greater
access to capital including access to deeper pools of
capital as outlined above.
To effectively manage the stapled structure across
two jurisdictions, future equity capital raised by the
Stapled Group will be allocated between Vital NZ
and Vital Australia based on the relative value of their
respective net assets at the time of the capital raising.
This should ensure that the underlying cost base of
the Vital NZ Units and the Vital Australia Units is not
impacted. This would be achieved by new Stapled
Units being issued at a single issue price, which is then
apportioned between the new Vital NZ Units and Vital
Australia Units based on underlying net assets.
If capital was required in one entity in the Stapled
Group but not the other, arm’s-length-terms loans
within the Stapled Group would be used, or external
debt would be repaid by one entity and drawn by the
other. For example, if Vital undertook an equity capital
raising to fund an acquisition by Vital NZ, the equity
capital raised would be allocated between Vital NZ and
Vital Australia based on their respective net assets.
The new capital allocated to Vital Australia would then
become available to Vital NZ by either:
•
Vital Australia lending it to Vital NZ on arm's-
length-terms; or
•

Vital Aus
tralia repaying external debt, which
would then allow Vital NZ to draw an equivalent
amount of external debt.
Joint Investment Policy
The Proposal should not affect the application of the
NorthWest joint investment policy which will continue
to apply to Vital (available on Vital’s website
8
).
The policy is intended to create a robust framework
for the appropriate management of actual or
perceived conflicts of interests. In a situation where an
actual or perceived conflict of interest arises between
Vital and any other member of the NorthWest group,
broadly the policy envisages:
• an investment committee managing actual or
perceived conflicts;
•

the appointment of separ
ate persons to
specifically represent the interests of each
relevant party;
•

specific guidelines which appl
y to particular types
of potential conflict situations;
•
approval of all related party transactions by the
Board of the relevant entity (where conflicted
directors may abstain or absent themselves from
Board discussions, or both);
8
A copy of the joint investment policy is available at http://www.vitalhealthcareproperty.
co.nz/governance

• the approval of all investment decisions to be
taken by the relevant Board having regard to a
number of factors including, but not limited to,
the rate of return on the investment for Vital as
a whole, the jurisdiction in which the property is
located and the significance (strategically and
on a relationship basis) of the investment to the
relevant entity;
•
awareness and training in relation to the
identification and management of potential
conflicts of interest; and
• monitoring and reporting to reinforce awareness
of this policy and the culture of compliance.
Stapling mechanics
Stapled Units are investments that are contractually
or constitutionally bound together so that they cannot
be separated without unstapling (which may only
occur in limited circumstances and, in some instances,
would require Unitholder approval). The essential
nature of a stapled security is that one element
cannot be traded without the other element(s).
If the Proposal is approved and implemented, the
Vital NZ Units and Vital Australia Units will be
Stapled and the resulting Stapled Units would form
a single saleable security that would trade on the
NZX Main Board and the ASX under the one ticker
code (VHP). The effect is that each Vital NZ Unit
and the corresponding Vital Australia Unit to which
it is Stapled will only be able to be traded together
as one Stapled Unit. As a result, the Stapled Units
and the Stapled Group should be viewed as a single
investment proposition (albeit, comprising two sets of
units in two different trusts).
When Stapling applies:
•

the number of Vital NZ Units and Vital Aus
tralia
Units on issue must, at all times, be the same;
•
each Unitholder must at all times hold the same
number of Vital NZ Units and Vital Australia
Units;
•

if fur
ther Vital NZ Units are issued, they must be
issued with a matching number of Vital Australia
Units (and vice versa);
•

if Vital NZ Units are bought back or cancelled,

the corresponding Vital Australia Units to which
they are Stapled must also be bought back or
cancelled from the same Unitholder(s) (and vice
versa); and
•
no tr
ansfer of any Vital NZ Units can be
registered unless there is a corresponding
transfer from the same Unitholder(s) to the same
transferee(s) of the Vital Australia Units to which
the Vital NZ Units are Stapled (and vice versa).
Relevantly for Unitholders, the votes attached to:
•
Vital NZ Units will only be able to be exercised in
respect of resolutions of Vital NZ and will not be
able to be exercised in respect of resolutions of
Vital Australia; and
• Vital Australia Units will only be able to be
exercised in respect of resolutions of Vital
Australia and will not be able to be exercised in
respect of resolutions of Vital NZ.
However, as Unitholders will hold an equal number
of Vital NZ Units and Vital Australia Units, they will
be able to vote at meetings of both Vital NZ and Vital
Australia. In practice, it is intended that meetings
of Vital NZ and Vital Australia will be held together
and convened by way of a single notice of meeting.
The agenda and accompanying procedural notes will
make it clear whether a resolution being put to the
meeting relates to Vital NZ or Vital Australia.
The practical impacts of a Unitholder holding a
Stapled Unit include that:
•

the Unitholder will be a unitholder of both Vital

NZ and Vital Australia;
•

to sell a Vital NZ Unit or a Vital Aus
tralia Unit,
the corresponding Vital Australia Unit or Vital
NZ Unit, as applicable, must be sold to the same
purchaser. This will happen automatically when
selling through the NZX or ASX; and
•

dis
tributions would be received from each of Vital
NZ and Vital Australia, as discussed above.
Stapling is achieved through provisions in the
respective trust deeds of Vital Australia and Vital NZ,
and also through the Stapling Deed which will set out
the terms and conditions of the relationship between
Vital NZ and Vital Australia.
Dual listed structure and waivers
VHPT is listed on the NZX Main Board. If the Proposal
is approved and implemented, VHPT (as Vital
Australia) will remain listed on the NZX Main Board
and will also be listed on the ASX. Vital NZ will also
be listed on the NZX Main Board and the ASX. Being
listed on the ASX as well as the NZX Main Board
will allow investors to trade in Stapled Units on both
exchanges.
As a result of the dual listed structure, the Manager
(in respect of Vital NZ) and the Responsible Entity (in
respect of Vital Australia) will be subject to:
•
the obligations imposed on “Issuers of Fund
Securities” under the NZX Listing Rules; and
•

the obligations imposed on “foreign e
xempt”
entities under the ASX Listing Rules.
ASX foreign exempt listings are for entities that
are listed on another stock exchange and have a
secondary listing on the ASX. They must comply
VITAL FOLLOWING IMPLEMENTATION OF THE PROPOSAL 29

30 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
primarily with the rules of their home exchange and
are exempt from complying with most of the ASX
Listing Rules. In this case, Vital NZ and Vital Australia
will have their primary listing on the NZX and primarily
comply with the NZX Listing Rules. They will be
exempt from complying with most of the ASX Listing
Rules.
Although Vital NZ and Vital Australia will both be
listed, Vital would be quoted under a single ticker code
(VHP) and a single price would apply to the Stapled
Units (on each of NZX and ASX).
Vital will be subject to regular reporting and
disclosure obligations under the terms of the FMC
Act, Corporations Act and Listing Rules. In particular,
these obligations include promptly and without
delay releasing to NZX and ASX any information
that a reasonable person would expect to have a
material impact on the price for Stapled Units, if it
were generally available to the market. Assuming
that the requisite relief is obtained from the FMA and
ASIC, these continuous disclosure obligations will be
assessed across the Stapled Group, rather than for
either of Vital NZ or Vital Australia separately.
Key regulatory regimes that will apply to
Vital
Vital is currently a managed investment scheme
regulated by Part 4 of the FMC Act. It is listed on the
NZX as an issuer of fund securities.
After the Restructuring, both of these regimes will
still apply to the Stapled Group, as Vital NZ will be a
managed investment scheme for the purposes of the
FMC Act and each of Vital NZ and Vital Australia will
be listed on the NZX as issuers of fund securities.
In addition, after the Restructuring:
(a)
Vital Australia will be subject to the Corporations
Act as a registered managed investment scheme
regulated by that statute; and
(b) Vital NZ and Vital Australia will be listed on the
ASX.
The FMC Act is the New Zealand statute that
regulates managed funds, whereas the Corporations
Act is, broadly, the equivalent in Australia. Accordingly,
the FMC Act will regulate Vital NZ and the
Corporations Act will regulate Vital Australia.
There are some inherent differences between the
two regimes. For example, the FMC Act requires that
managed investment schemes have an independent
supervisor and it is proposed that the Supervisor
assumes that role for Vital NZ. There is no statutory
concept of an independent supervisor under the
Corporations Act and it will not be possible for Vital
Australia to replicate that role under the Australian
regime. However, the Responsible Entity will perform
a broadly similar role as described below and there are
additional protections and requirements in place under
Australian regulatory regime, notably:
(1) the Responsible Entity is required to hold and
maintain an Australian financial services licence
(AFSL) which includes a number of compliance,
financial and audit requirements; and
(2) there must be a Compliance Plan in place
covering the key aspects of Vital’s operations
and compliance with this is plan must be
independently audited not less than annually.
However, for the avoidance of doubt, there is no
requirement that the Responsible Entity is an
independent organisation like the Supervisor is and the
Responsible Entity will be a member of the NorthWest
group.
Australian Governance Arrangements
While the New Zealand FMC Act and Australian
Corporations Act regimes are similar in many respects,
there will be inherent differences between the
structure of Vital Australia and Vital NZ. In particular:
•
Vital NZ will have the New Zealand Manager and
the Supervisor; whereas
• Vital Australia will have the Responsible Entity
and the Australian Manager.
Vital Australia will have governance arrangements in
line with the majority of similar externally managed
real estate investment trusts in Australia. The key
entities for Vital Australia will be:
•

the R
esponsible Entity, which will have certain
statutory responsibilities, including a requirement
to hold the assets of Vital Australia as trustee and
the powers to operate the managed investment
scheme and must do so honestly and in the best
interests of Vital Australia Unitholders, and has
ultimate responsibility for Vital Australia. The
Responsible Entity is required to hold an AFSL
and is regulated by ASIC; however
•

the R
esponsible Entity will delegate powers
of management to the Australian Manager,
including the powers to acquire or divest
properties and devise investment strategy. This
will be set out in the Investment Management
Agreement.
The board of the Australian Manager will comprise
the same individuals as the New Zealand Manager. It is
intended that the board of the Responsible Entity will
comprise Australasian based NorthWest executives.
Under the Corporations Act, the Responsible Entity
is subject to statutory duties, including duties to act
in the best interests of Vital Australia unitholders,
act honestly, exercise care and diligence, and treat

unitholders of the same class equally. The role of the
Responsible Entity also includes ensuring that Vital
Australia is properly managed to protect unitholder
interests by overseeing matters of regulatory
compliance, particularly compliance with the
Corporations Act, the Responsible Entity’s AFSL and
the Vital Australia Trust Deed.
The Responsible Entity is also required to adopt and
comply with a Compliance Plan, which provides a
framework to review and monitor the governance
of Vital Australia. The Compliance Plan will set
out key processes, systems and measures that
the Responsible Entity is to apply when overseeing
matters of regulatory compliance, including
arrangements for ensuring:
•

the Compliance Plan is audited annuall
y as
required under the Corporations Act;
•
adequate records are maintained; and
• assets of Vital Australia are properly identified and
held separately from assets of the Responsible
Entity.
As required by the Corporations Act, the Responsible
Entity’s compliance with the Compliance Plan will be
audited annually by an independent Compliance Plan
auditor. The Compliance Plan auditor’s report must be
lodged with ASIC with details on the adequacy of the
Compliance Plan. The auditor of the Compliance Plan
must also notify ASIC in writing if contravention of the
Corporations Act has occurred and it believes that the
contravention has not been or will not be adequately
dealt with.
The Responsible Entity will also establish a
Compliance Committee to support its monitoring of
compliance, which is required to comprise a majority
of external members, and will initially include at least
two of Vital’s independent directors. The role of the
Compliance Committee will be to oversee and advise
the Responsible Entity of its compliance with the
Corporations Act, AFSL, the Vital Australia Trust Deed
and the Compliance Plan. The Compliance Committee
has a statutory function which requires it to:
•

monitor the e
xtent to which the Responsible
Entity complies with the Compliance Plan and
report on its findings to the Responsible Entity;
•
repor
t to the Responsible Entity any breaches of
the Corporations Act or the Vital Australia Trust
Deed;
•

repor
t to ASIC if the Compliance Committee is
of the view that the Responsible Entity does not
propose to take appropriate action to deal with
a reported breach of the Corporations Act or the
Vital Australia Trust Deed; and
• regularly assess whether the Compliance Plan is
adequate, report to the Responsible Entity on that
assessment and make recommendations about
any changes it considers should be made to the
Compliance Plan.
As required by the Corporations Act, the Responsible
Entity must hold an appropriate AFSL at all times
to operate Vital Australia. To obtain and maintain an
AFSL, the Responsible Entity is required to meet a
number of eligibility requirements to the satisfaction of
ASIC, including:
•
an approved combination of qualifications,
competency standards and practical experience
for each of the executives nominated as
responsible managers;
•
adequate risk management sy
stems;
• sufficient financial resources to carry on the
business and operations of Vital Australia; and
• certain ongoing obligations, such as training,
compliance, insurance and dispute resolution.
Although there is no equivalent to the role of the
Supervisor under the Corporations Act, the governance
parameters for Vital Australia have been established
with a view to preserving the position that exists for
VHPT. For example, VHPT’s existing protocols around
related party transactions will apply across the
Stapled Group, with independent directors leading
negotiations on behalf of Unitholders and signing any
required “arms’ length terms” certificates. As part of
those protocols, the Responsible Entity will not be
able to enter into any related party transaction, or
sign any equivalent certificates, without the approval
of the independent directors that are on the board
of the Australian Manager. The Responsible Entity
is also subject to the related party provisions of the
Corporations Act.
To ensure that Unitholders’ existing protections
are preserved, the Vital Australia Trust Deed will
include a provision that if the New Zealand Manager
is removed from its position as manager of Vital
NZ by Unitholders, the Responsible Entity will be
removed from Vital Australia. Similarly, the Investment
Management Agreement will terminate if the New
Zealand Manager is removed from its position
following a special resolution of unitholders of Vital
NZ.
VITAL FOLLOWING IMPLEMENTATION OF THE PROPOSAL 31

32 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
3. Details of
the Restructuring
Background
Vital first listed on NZX in 1999 with a portfolio of
healthcare real estate assets predominantly located
in New Zealand. Over time, a large proportion of
Vital’s investment opportunities have been located
in Australia contributing to approximately 75%
of Vital’s assets being based in Australia as of
today. The current structure is not efficient for
investors domiciled outside New Zealand. This is
largely because New Zealand tax is imposed on
income generated from the Australian Properties
in New Zealand under the current structure, which
effectively creates an additional layer of tax for
Australian and international investors. This impacts
the diversity of Vital’s Unitholder register, as well
as its overall liquidity and access to capital. Vital’s
ability to deliver value-add growth opportunities for
Unitholders is limited by these factors, as the cost
of capital is higher than it otherwise could be, which
affects its ability to be competitively positioned as an
international investment vehicle. In order to address
these limitations, the Board has evaluated a wide
range of options to optimise elements of the Vital
structure.
The Variations
The Variations are proposed amendments to the
VHPT Trust Deed which will allow the Restructuring
to take place and establish the Stapled Group.
Broadly, the amendments fall into three categories:
•

Dis
tribution Amendments: amendments to
allow VHPT to make distributions of Vital NZ
Units to Unitholders (the current VHPT Trust
Deed only contemplates distributions of cash);
•

S
tapling Amendments: the addition of clauses
to provide for the Stapling of Vital NZ Units
and Vital Australia Units and to facilitate the
operation of the Stapled Group; and
• Australian Migration Amendments:
amendments to allow VHPT to migrate to
Australia and become Vital Australia, and
make other changes that are consistent with
it transitioning to an Australian managed
investment scheme registered with ASIC under
the Corporations Act. For clarity, Vital NZ will
be a New Zealand managed investment scheme
registered under the FMC Act (as VHPT is
currently).
A more detailed summary of the proposed
amendments to the VHPT Trust Deed is set out
in Schedule 3. A copy of the full VHPT Trust Deed
marked-up so as to show proposed amendments is
available at:
www.vitalhealthcareproperty.co.nz/governance.
A hard copy may also be obtained on request to:
By email: vital@computershare.co.nz
By phone : 0800 650 034 (within New Zealand) or
+64 9 488 8777 (outside New Zealand) between
8.30am to 5.00pm Monday to Friday (New Zealand
time)
Current structure of VHPT
VHPT is a managed investment scheme registered
with the Registrar of Financial Service Providers
under the FMC Act and listed on the NZX Main
Board. Trustees Executors Limited is VHPT’s
licensed supervisor and NorthWest Healthcare
Properties Management Limited is the licensed
manager.
VHPT invests in a portfolio of healthcare real estate
assets in New Zealand (~25%) and Australia (~75%).
The NZ Properties and the Australian Properties are
held through wholly-owned holding entities, which
are ultimately owned by VHPT which is based in New
Zealand.

VHPT’S CURRENT STRUCTURE (SIMPLIFIED)

The Restructuring
The Restructuring involves:
• the separation of the NZ Properties and the
Australian Properties into separate holding
vehicles, so that:
»the NZ Proper
ties are held by Vital NZ in
New Zealand; and
»the Aus
tralian Properties are held by Vital
Australia in Australia; and
•
dis
tributing the Vital NZ Units to Unitholders
and then Stapling the units in Vital NZ and Vital
Australia to form the Stapled Group.
The following is a summary of the key steps
proposed to be undertaken to complete the
Restructuring:
•
Step 1: Establish Vital NZ
•
S
tep 2: Transfer the NZ Properties to Vital NZ
•

S
tep 3: Vital NZ is demerged and units are
Stapled to VHPT
•
Step 4: VHPT migrates to Australia and
becomes Vital Australia
•
Step 5: Vital NZ Units and Vital Australia Units
are listed on NZX and ASX
Each of these steps is described in further detail
below.
VHPT Units are
traded on NZX
(VHP)
Australian
Properties
Board of
Manager
NZ Manager
NZ Supervisor
UNITHOLDERS
NZ
Properties
New Zealand
Australia
Holding Entities
VITAL
HEALTHCARE
PROPERTY TRUST
DETAILS OF THE RESTRUCTURING 33

34 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
If the Proposal is approved by Unitholders, subject
to the conditions set out below, Steps 1 and 2 are
expected to be completed well in advance of Steps 3 –
5. Steps 3 – 5 will occur sequentially after the Stapling
and Distribution Record Date, which will be determined
by the Board. For the brief period while steps 3 and 4
are being implemented, trading of Stapled Units on
the NZX will continue. For this period each Stapled
Unit will comprise a Vital NZ Unit and a VHPT
Unit. Trading on ASX will not commence until after
VHPT has been registered with ASIC as a managed
investment scheme governed by the Corporations
Act. The Manager will provide updates of how these
key steps are being implemented via the NZX markets
announcements platform (MAP).
Conditions to the Proposal being
implemented
The implementation of the Proposal is conditional on
the following conditions being satisfied:
•

the Proposal being appro
ved by Unitholders;
• the Responsible Entity obtaining an Australian
financial services licence to provide certain
financial services and to operate Vital Australia as
a registered managed investment scheme under
the Corporations Act (see Section 7 Risks for
further information);
•

A
SIC registering Vital Australia as a managed
investment scheme under the Corporations Act
and the Registrar of Financial Service Providers
registering Vital NZ as a managed investment
scheme under the FMC Act (see Section 7 Risks
for further information);
•

Inland R
evenue issuing a binding product ruling
confirming that the distributions arising from step
3 and 4 to implement the Restructuring will be
excluded income to Unitholders for New Zealand
tax purposes;
•
New South Wales and Victorian Offices of State
Revenue issuing rulings confirming the availability
of the relevant stamp duty exemption in relation
to step 4 of the Restructuring;
•
the Proposal being able to be implemented on or
prior to 30 June 2020;
• the NZX accepting an application for Vital NZ to be
listed on the NZX Main Board;
• the Manager and Vital’s lenders agreeing the
necessary implementation steps and required
amendments to the Facility Agreement to give
effect to the Restructuring (to date the lenders
have provided approval in principle);
•
there being no legal impediment to the
implementation of the Restructuring; and
• the Board remaining satisfied that the Proposal is
in the best interests of Unitholders.
If these conditions have been satisfied, the Board will
determine the dates over which the Restructuring will
be implemented. The Board’s current expectation is
that the conditions will be satisfied in time to allow
for the Restructuring to be implemented in May/
June 2020 and by no later than 30 June 2020. The
Manager will notify Unitholders of the timing for
implementation by NZX announcement.
Detailed structure charts
This Section steps through the key Restructuring
steps based on simplified structure charts that show
the material details most relevant to Unitholders.
Please refer to Schedule 7 for detailed structure
charts showing the position before and after
the Restructuring. The Manager may modify the
implementation steps at its discretion if it considers
that to do so is in Unitholders’ best interests and does
not detract from the substance of the Proposal as
described in this Notice of Meeting.
Ascot Hospital, Auckland, New Zealand.

Step 1: Establish Vital NZ
If the Proposal is approved, Vital NZ will be established as a new unit trust, registered as a managed investment
scheme under the FMC Act. Vital NZ will be managed and supervised by the same licensed manager and
supervisor as VHPT, being NorthWest Healthcare Properties Management Limited and Trustees Executors
Limited respectively.
Initially Vital NZ will be wholly-owned by VHPT and the Vital NZ Trust Deed will be consistent with its status as a
wholly-owned entity.
VHPT Units are traded on NZX (VHP)
Australian
Properties
Board of
Manager
NZ
Manager
NZ Supervisor
UNITHOLDERS
Holding Entities
NZ
Properties
New Zealand
Australia
VHPT Units are traded on NZX (VHP)
Australian
Properties
Board of
Manager
UNITHOLDERS
Holding Entities
NZ
Properties
New Zealand
Australia
NZ Manager
NZ Supervisor
Step 2: Transfer the NZ Properties to Vital NZ
Once Vital NZ has been established, the NZ Properties will be transferred to Vital NZ for arm’s-length
consideration. This will be a transaction between entities wholly-owned by VHPT.
VITAL
NZ
VITAL
NZ
VITAL
HEALTHCARE
PROPERTY TRUST
VITAL
HEALTHCARE
PROPERTY TRUST
DETAILS OF THE RESTRUCTURING 35

36 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
Step 3: Distribution pursuant to which Vital NZ is demerged
Vital NZ will be separated from VHPT by VHPT distributing the Vital NZ Units to Unitholders on a pro-rata basis
in proportion to their VHPT Units. Unitholders will receive one Vital NZ Unit for every one VHPT Unit they hold on
the Stapling and Distribution Record Date. No consideration will be payable by Unitholders for the Distribution
(i.e., the Vital NZ Units will be distributed to Unitholders for free).
At the time of the Distribution, Vital NZ will adopt the Vital NZ Trust Deed, which will be similar to the existing
VHPT Trust Deed. Differences between the current VHPT Trust Deed and the Vital NZ Trust Deed include:
•
providing for the Stapling of the Vital NZ Units and the Vital Australia Units;
•
allowing Vital NZ to make non-cash distributions to Unitholders (e.g. distribution of assets such as units); and
• certain other amendments to ensure that the Vital NZ Trust Deed and Vital Australia Trust Deed are as
similar as possible, subject to differences as a result of different statutory regimes in New Zealand and
Australia.
A detailed explanation of the key differences between the existing VHPT Trust Deed and the proposed new Vital
NZ Trust Deed and Vital Australia Trust Deed is set out in Schedule 3.
The Stapling Amendments to the VHPT Trust Deed will become immediately effective on this step occurring. As
a result, immediately on being distributed to Unitholders, the Vital NZ Units will be Stapled to VHPT Units so that
the resulting Stapled Units form a single saleable security. These Stapled Units will then continue trading on the
NZX.
Vital NZ Units and
VHPT Units are
Stapled
Australian
Properties
UNITHOLDERS
Holding Entities
New Zealand
Australia
NZ Supervisor
NZ Manager
NZ
Properties
Board of
Manager
Stapled Units
VITAL
NZ
VITAL
HEALTHCARE
PROPERTY TRUST

Step 4: VHPT migrates to Australia
Following the Distribution, VHPT and its subsidiaries, VHPL and Colma, will re-domicile from New Zealand to
Australia.
VHPT will migrate to Australia and become Vital Australia by a series of separate steps, including:
• VHPT’s subsidiaries, VHPL and Colma, will migrate from New Zealand to Australia pursuant to corporate
migration provisions in the Companies Act and Corporations Act;
•

the Aus
tralian Migration Amendments to the VHPT Trust Deed becoming effective;
•
the appointment of the Aus
tralian Manager under the Investment Management Agreement;
• the removal of the Supervisor and the Manager and the appointment of the Responsible Entity, transferring
VHPT’s effective management to Australia on Registration;
• Registration occurring, which is subject to the Responsible Entity obtaining an appropriate AFSL to provide
certain financial services and to operate Vital Australia as a registered managed investment scheme under
the Corporations Act; and
• de-registering VHPT with the Registrar of Financial Service Providers.
A number of the steps listed above are subject to actions being undertaken by ASIC. The risk of these actions not
being undertaken, or not being undertaken in time to enable the Proposal, is discussed further in Section 7 Risks.
Step 5: Vital NZ Units and Vital Australia Units are listed on NZX and ASX
Vital NZ and Vital Australia will each be primary listed on the NZX Main Board, with a foreign exempt listing on
the ASX. The Stapled Units will then be quoted and traded as a single security on the NZX and ASX under the
ticker code VHP. The Manager currently expects that trading on ASX will commence in May/June 2020.
The Stapled Group has been granted a number of waivers from the NZX Listing Rules and the ASX Listing Rules.
Further details in respect of those waivers are set out in Section 6 Additional Information.
Following the completion of the Restructuring, Vital NZ will also elect to be a PIE.
New Zealand
Australia
Vital NZ Units
and Vital
Australia Units
are Stapled
Australian
Properties
Board of
Manager
Board of RE
AU
Manager
(appointed by the Responsible
Entity under the Investment
Management Agreement)
Australian Holding
Vehicles
AU Responsible Entity
UNITHOLDERS
NZ
Properties
Board of
Manager
NZ Manager
NZ Supervisor
VITAL
NZ
VITAL
AUS
DETAILS OF THE RESTRUCTURING 37
Stapled Units

38 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
4. Advantages and
Disadvantages
Advantages
The Board considers that the Restructuring will
provide enhancements for Unitholders relative
to the current structure. The advantages of the
Restructuring include the following:
Increase in distributions to Unitholders
•

The Proposal is e
xpected to result in an increase
in after-tax distributions to all Unitholders. For
example, in the first full financial year post
Restructuring based on an illustrative analysis
of FY20, the Net Distribution for a New Zealand
Unitholder with a 30% illustrative tax rate
would increase by 10% after the Proposal (refer
Section 5 – Financial Impacts for Unitholders for
further information including key assumptions).
•

The increase in dis
tributions will be driven by
changes in tax treatments and capital structure
adjustments as part of the Restructuring,
including changes to the debt structure within
Vital and the close-out of Vital’s full interest
rate swaps portfolio. This is expected to
provide ongoing financial benefits across the
group. Refer to Section 5 Financial Impacts for
Unitholders for further information.
•

As par
t of the Proposal, the Manager will amend
Vital’s distribution policy to make distributions
to Unitholders which target a payout ratio of
95-100% of AFFO. This will be enabled by
the Restructuring, as Vital’s annual cash tax
payments under the proposed structure will be
lower and more certain than under the current
structure, meaning that Vital will be able to pay
out higher distributions. Refer to Section 2 Vital
following implementation of the Proposal for
further information.
Vital will have access to a broader range of
capital sources
•

Vital’
s current structure significantly limits
its ability to attract Australian and offshore
investors. This is because of structural
inefficiencies (largely resulting from New
Zealand tax imposed on income generated from
Australian Properties through a New Zealand
holding entity) and the NZX-only listing which
falls outside of the investment mandates of
many Australian and offshore investors. These
factors limit the depth and breadth of Vital’s
Unitholder register and limit the level of capital
funding available.
•
The addition of an A
SX listing is intended to
increase the appetite and ability of Australian
and international investors and attract a
more diversified unitholder register over time.
This will be supported by the removal of the
additional layer of tax imposed on distributions
relating to the Australian Properties to
Australian and international investors.
»Appro
ximately half of NZX50 companies
have a dual-listing on the ASX and benefit
from access to a greater pool of capital and
additional liquidity.
•

With appro
ximately 75% of assets already
based in Australia, the Board expects that,
after the Restructuring, Vital will represent an
attractive investment proposition for Australian
and international investors. This is expected to
provide Vital with access to additional long-term
capital sources to support its future business
strategy and growth initiatives.
Potential for improved value recognition and
liquidity of Vital units over time
•

The A
SX foreign exempt listing facilitated by
the Restructuring is expected to make Vital
more accessible and attractive to Australian and
international investors and is aligned with Vital’s
business strategy.
•
With the majority of Vital’s assets (~75%) being
based in Australia and a large proportion of
Vital’s future growth opportunities expected to
be in the Australian market, the Restructuring
will provide an enhanced structure for Vital’s
strategy going forward.
•

A
t completion of the Proposal, Vital is expected
to be the only healthcare property vehicle
listed on the ASX, and the Manager believes
that healthcare property is an asset class of
increasing focus and demand. Demand for
Vital units from a broader range of potential
Vital investors is expected to improve the value
recognition and trading liquidity of Vital units
over time.

• As part of Vital’s strategy, Vital plans to actively
target inclusion in the ASX/S&P 300 index. This
would in turn further grow Vital’s access to a
broader range of capital sources and potential
for increased value recognition. Vital’s inclusion
in the ASX/S&P index would be expected to lead
to increased demand from index funds growing
over time as part of portfolio reweighting
and demand from institutional investors with
mandate restrictions outside the ASX/S&P 300
index. In addition, index inclusion would improve
Vital’s visibility in Australia, including the
potential to grow broker and analyst coverage
over time. Vital plans to achieve inclusion in the
ASX/S&P 300 index as a medium term target.
However, inclusion is subject to Vital meeting
the required criteria and, as a result, timing
will depend on the time taken to achieve those
criteria.
9
Enhanced competitive positioning on future
growth opportunities
•
Vital’s specialist healthcare property strategy
is driven by pursuing value-added acquisitions
and development projects in Australia and New
Zealand. The ability to deliver this strategy
going forward is impacted by Vital’s ability to
fund and execute on these healthcare property
acquisitions and developments at competitive
rates and valuations.
•
Gaining access to a broader range of capital
sources is expected to lead to a more efficient
cost of capital for Vital over time. The
increased access to capital and efficient cost
of capital is expected to strengthen Vital’s
competitive positioning for future acquisition
and development projects for future earnings
growth.
Disadvantages
The disadvantages of the Restructuring may include
the following:
Operational complexity
•

Oper
ating as the Stapled Group will result in
increased complexity for Vital to manage and
increased operating costs due to operating
two listed entities in two legal jurisdictions. A
central feature of the Restructuring is that it
creates two listed entities (Vital NZ and Vital
Australia) rather than one. While the units in
those two entities are Stapled together and it
is intended to operate as a single consolidated
group, having two listed entities will create
some operational complexity. The NZ Manager,
the Responsible Entity and the Australian
Manager will, however, coordinate activities
where possible in order to help reduce these
complexities. In addition, there will be some
additional operating costs associated with
operating the Stapled Group, including annual
ASX listing costs (approximately A$90,000),
some additional registry costs and some
additional indirect costs may arise when Vital is
operating as the Stapled Group, albeit they are
not currently apparent and are not expected to
be material.
•
Having two listed entities in two jurisdictions
means that: Vital NZ will be a managed
investment scheme under New Zealand’s FMC
Act; and Vital Australia will be a registered
managed investment scheme governed by
Australia’s Corporations Act. These underlying
laws are similar in many respects, but there
are some differences that will result in legal,
regulatory and operational complexities that
Vital needs to manage going forward as the
Stapled Group. However, Vital will be exempt
from complying with most of the ASX Listing
Rules.
Implementing the Restructuring involves costs
•
The implementation of the Restructuring will
result in costs being incurred by Vital as part of
the transition. These costs include transaction
costs such as legal, financial and tax advice, the
costs associated with the Independent Adviser,
debt amendments and ASX initial listing costs.
Given the detailed evaluation and preparation
process for the Restructuring, the transaction
costs are estimated to be NZ$8m.
10

ADVANTAGES AND DISADVANTAGES 39
9
The key criteria for S&P/ASX 300 index inclusion are float-adjusted market capitalisation
and relative liquidity on the ASX. As at 31 January 2020, the float-adjusted market
capitalisation threshold for index inclusion was approximately A$375m and the estimated
relative liquidity threshold for index inclusion was approximately A$350,000 median daily
value traded for the previous six months (at least 0.1% relative liquidity). Please refer to
www.spindices.com for definitions of float-adjusted market capitalisation and relative
liquidity and further information. Analysis assumes ranking of 274 for free-float adjusted
market capitalisation threshold. This analysis is an estimate only and is subject to change.

40 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
Increase in Vital’s gearing
• Vital’s gearing will increase as a result of the
Restructuring due to the close-out of Vital’s
interest rate swap portfolio (as outlined in
Section 5 Financial Impacts for Unitholders) and
the transaction costs which will be funded by
Vital’s debt facilities. Vital’s gearing based on 30
June 2019 increases from 35.3% to 38.4% on a
pro-forma basis.
11

•
The Board remains comfor
table with this pro-
forma gearing level based on Vital’s unique long-
term structured cash flow in a defensive sector.
NZ Unitholder filing requirements
• The Restructuring will mean that going forward
Vital’s New Zealand based Unitholders will hold
units in both a New Zealand PIE entity (Vital NZ)
and an Australian MIT entity (Vital Australia)
rather than only units in a New Zealand PIE entity.
•
New Zealand Unitholders will have additional
income information to include in their New
Zealand income tax returns than what is currently
required in order to meet their tax obligations:
as Vital Australia will be a foreign unit trust,
New Zealand Unitholders will either hold an
investment in a foreign investment fund (FIF)
and be subject to tax on their investment in Vital
Australia in accordance with New Zealand’s FIF
regime or be taxed on distributions from Vital
Australia. This will change how New Zealand
Unitholders are taxed on their investment in Vital.
Where applicable, the FIF regime will require New
Zealand Unitholders to pay tax under this regime
and return the FIF income in a tax return. Refer to
Schedule 6 - Overview of the New Zealand Foreign
Investment Fund Regime and Application for New
Zealand Unitholders for further details.
Change to structure of Vital Australia to comply
with Australian legal requirements
•
The Restructuring will mean that the Australian
Properties will change from being indirectly held
through a New Zealand managed investment
scheme to an Australian managed investment
scheme registered with ASIC under the
Corporations Act. The Australian regime is
different to the New Zealand regime.
•

The Aus
tralian Corporations Act regime
does not include a role that is identical to the
independent supervisor that registered managed
investment schemes are required to have under
the New Zealand FMC Act regime. However,
the Corporations Act does achieve robust
governance arrangements through the role
of the Responsible Entity and the Compliance
Committee (comprising a majority of external
directors).
•
The Supervisor’s statutory role is defined within
the context of the FMC Act and other applicable
New Zealand law. As a result, the scope of
the Supervisor’s role under the Stapled Group
structure will be limited to oversight of Vital NZ.
The Supervisor will not have direct oversight of
the Australian Properties after the Restructuring.
•
The function of oversight and compliance will
instead be undertaken by the Responsible Entity
and the Compliance Committee as described in
Section 2 Vital following implementation of the
Proposal and summarised below. In practice,
the Supervisor will have a degree of negative
control over matters that relate to the wider
Stapled Group, given the way the Stapled Group
is expected to operate. For example, issues of
new units must be done by Vital NZ and Vital
Australia together, so having oversight of Vital
NZ will allow for influence over the wider group.
The Supervisor will not, however, owe any duties
to investors in relation to Vital Australia or its
assets.
•
Vital Aus
tralia will at all times be governed
by a Responsible Entity which is ultimately
responsible for Vital Australia and whose role
is to ensure that Vital Australia is properly
managed to protect Unitholder interests, and
that Vital Australia operates in an appropriate
environment of corporate governance. The
Responsible Entity’s role is defined in the
Corporations Act which requires it to act
honestly and in the best interests of Unitholders.
•
To comply with the Corporations Act, the
Vital Australia Trust Deed and general law,
the Responsible Entity is required to adopt
a Compliance Plan which sets out the key
processes, systems and measures that the
Responsible Entity will apply when governing
Vital Australia. The Compliance Plan comprises
an extensive compliance management and
reporting structure, which will be audited
annually by an independent Compliance Plan
auditor.
10
Approximately NZ$1.5m of transaction cots were incurred in prior years and have been
excluded from this number.
11
Gearing based on debt to total assets - calculation in accordance with VHPT’s Trust Deed
and excludes A$80.3m related party loan which was repaid on 2 August 2019.

• The Corporations Act does not require that
the Responsible Entity is an independent
organisation like the Supervisor is and the
Responsible Entity will be a member of the
NorthWest group. Because the Responsible
Entity will not have a majority of external
directors, the Corporations Act will require that
it establishes a Compliance Committee.
•
The Compliance Committee must at all
times comprise a majority of independent
members. Broadly, its role will be to monitor
the Responsible Entity to ensure it is fulfilling
its responsibilities for corporate governance and
provide compliance recommendations to the
Responsible Entity and reports on the status and
management of compliance risks and breaches.
Refer to Section 2 Vital following implementation
of the Proposal for additional detail on the
Compliance Committee’s statutory functions.
Weighing up of advantages and disadvantages
The Board has carefully considered the advantages
and disadvantages of the Proposal for Vital and
for Unitholders. After weighing them up, the Board
considers that the Proposal is in the best interests of
Vital and Unitholders and unanimously recommends
that Unitholders vote to approve it.
Separately, the Independent Adviser, Grant Samuel,
has also considered the above advantages and
disadvantages as part of its assessment of the
merits of the Proposal. Grant Samuel has concluded
that the Proposal is in the best interests of all
Unitholders when it is analysed in combination with
the capital structure initiatives and potential value
uplift from an increase in Vital’s unit price.
ADVANTAGES AND DISADVANTAGES 41

42 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
5. Financial impacts
for Unitholders
The financial impacts of the Proposal for Unitholders
should be considered in the context of the broader
advantages (please refer to Section 4 Advantages
and Disadvantages) which are expected to deliver
additional value enhancements to Unitholders over
time. These additional value enhancements are
expected to be driven by access to a larger and
deeper pool of capital, making Vital a more attractive
investment opportunity, increasing liquidity in Vital
units and improving its competitive position for
future acquisitions and developments. The Board
considers that these factors will increase the value
of Vital units over time, however, these benefits
are subject to other market factors and difficult to
quantify.
The primary financial impacts of the Proposal that
can be quantified are the effects of the change in
capital structure, tax and the flow on changes in
distributions and an increase in the payout ratio. An
analysis of these impacts on Unitholder distributions
is provided below.
What is the impact of the Proposal on
Unitholder distributions?
The Proposal is expected to result in an increase in
Net Distributions to all Unitholders in the first full
financial year after the Proposal is implemented.
For example, the Net Distribution for a New Zealand
Unitholder with a 30% illustrative tax rate is
expected to increase by 10% after the Proposal is
implemented, based on illustrative pro-forma FY20
analysis.
The Board has previously provided guidance that
the FY20 Gross Distributions will be at least 8.75
cents per unit. Taking this as a starting point, the
illustrative analysis below explains the impacts
of the Proposal by showing the position both with
and without the Proposal being implemented. The
analysis is based on a New Zealand Unitholder with
a 30% illustrative tax rate (refer to Chart 1 and
Table 1 below) and an Australian Unitholder with an
illustrative tax rate of 30% (refer to Table 1 below).
It assumes the Proposal had been implemented by
1 July 2019 in order to demonstrate the full year
impact.
Hurstville Private Hospital, Sydney, Australia.

Note: Gross Distribution assumed to be 8.75 cents per unit based on public guidance for the purposes of this analysis. All New Zealand Unitholder calculations have been shown
using the fair dividend rate (FDR) annual method for calculating Foreign Investment Funds (FIF) income for the purposes of this analysis. The Net Distribution for Unitholders who
are not subject to the FIF regime will differ to the above.
Refer to Schedule 2 for further information on the assumptions of this analysis.
TABLE 1: DISTRIBUTION IMPACT ANALYSIS: OVERVIEW OF ILLUSTRATIVE IMPACT OF THE PROPOSAL ON
NEW ZEALAND UNITHOLDERS WITH A 30% ILLUSTRATIVE TAX RATE AND AUSTRALIAN UNITHOLDERS
WITH A 30% ILLUSTRATIVE TAX RATE – FY20
FY20 Gross Distribution guidancePost Restructuring impact
Post Proposal impact (incl.
increase to 95% payout ratio)
Unitholder type
(30% illustrative tax rate)
Illustrative
units held
Gross
Distribution
Net
Distribution
Gross
Distribution
Net
Distribution
Change in Net
Distribution
(%)
Net
Distribution
Change in Net
Distribution
(%)
NZD centsNZD centsNZD centsNZD centsNZD cents
New Zealand unitholder
18.75 8.75 11.87 9.43 8 %9.64 10 %
Australia unitholder
18.75 7.08 11.87 8.89 26 %9.05 28 %
CHART 1: DISTRIBUTION IMPACT ANALYSIS: ILLUSTRATIVE IMPACT OF THE PROPOSAL ON NEW ZEALAND
UNITHOLDERS WITH A 30% ILLUSTRATIVE TAX RATE – PRO-FORMA FY20, NZD CENTS PER UNIT
Note: Gross Distribution assumed to be 8.75 cents per unit based on public guidance for the purposes of this analysis. All New Zealand Unitholder calculations have been shown
using the fair dividend rate (FDR) annual method for calculating Foreign Investment Funds (FIF) income for the purposes of this analysis. The Net Distribution for Unitholders who
are not subject to the FIF regime will differ to the above.
Refer to Schedule 2 for further information on the assumptions of this analysis.
Gross Distribution
in current
structure
Entity level
Restructuring
impact
Gross Distribution
post Restructuring
Net Distribution
post Restructuring
Increase to 95%
payout ratio
Net Distribution
post Proposal
Tax paid by
Unitholder post
Restructuring (NZ
unitholder with
30% illustrative
tax rate)
• No Unitholder tax is payable on the portion of the distribution received from
Vital NZ given Vital NZ will be a PIE.
• New Zealand Unitholders will be subject to tax on the investment in Vital
Australia under the fair dividend rate (FDR) method or taxed on distributions
(refer to Vital Australia income assumptions for New Zealand Unitholders and
Tax Implications for Unitholders below).
•
The entity level Restructuring impact includes
the tax and distribution impact of the changes in
tax treatment, capital structure and interest rate
swaps portfolio close-out as described below
under the heading Key features of the Proposal.
• The analysis assumes that the full benefit of the
Restructuring is distributed to Unitholders
8.759.439.64
3.12
0.21
(2.44)
+8
%
+10
%
11.87
FINANCIAL IMPACTS FOR UNITHOLDERS 43

44 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
Based on this illustrative analysis, the Net
Distribution for FY20 to a New Zealand Unitholder
with a 30% illustrative tax rate would be expected
to increase by 10% from 8.75 cents per unit to 9.64
cents per unit if the Proposal had been implemented
on 1 July 2019 (refer to Key Features of the Proposal
further below). The Net Distribution for FY20 to an
Australian Unitholder with a 30% illustrative tax rate
also improves following the Proposal as a result of
removing the New Zealand tax that was incurred
by those investors in relation to the Australian
Properties under the current structure. The Net
Distribution to those Australian investors remains
below that of New Zealand Unitholders with a 30%
illustrative tax rate.
Vital is not in a position to provide guidance on FY21
distributions. However, the Board is comfortable
that the illustrative FY20 Proposal impact analysis
is broadly representative of the impact expected in
FY21, using the same distribution of 8.75 cents per
unit as the starting point.
Vital Australia income assumptions for New
Zealand Unitholders
After the implementation of the Proposal, New
Zealand Unitholders will hold a direct interest in
Vital Australia, which is an Australian entity. As a
result, they will either be subject to New Zealand’s
FIF regime and will be required to include FIF income
in their annual income tax returns, generally under
the FDR method or be subject to tax on distributions
from Vital Australia. Where applicable, the FIF
regime requires establishing the market value of
Vital Australia. However, there will not be separate
unit price information available for Vital Australia
Units upon which to calculate FDR income, as
Vital Australia Units will be stapled to Vital New
Zealand Units. There is an agreed methodology for
calculating the market value of Vital Australia Units
for the purpose of calculating FDR income. This is
detailed in Schedule 6 - Overview of the New Zealand
Foreign Investment Fund Regime and Application for
New Zealand Unitholders.
For the purposes of the illustrative analysis, the
assumed NTA of Vital Australia as at the beginning
of the income year (i.e., 1 July) with a 4% premium
applied has been used as a proxy for the expected
market value of Vital Australia for the purposes
of calculating FDR income for New Zealand
Unitholders. Vital has traded at an average quarterly
premium to NTA of 4% since listing on the NZX
Main Board. This assumption is important to the
analysis because, if, for example, Vital’s unit price
was to trade at a premium/discount to NTA above or
below 4% this would result in an increase/decrease
in tax under the FDR method which would impact
the benefit of the Proposal for a New Zealand
Unitholder. This is because the agreed methodology
for calculating the market value of Vital Australia
will allocate the unit price of the Stapled Units
between Vital NZ and Vital Australia. This is detailed
in Schedule 6 – Overview of the New Zealand Foreign
Investment Fund Regime and Application for New
Zealand Unitholders.
The table below shows the impact of a range
of discounts/premiums to the assumed NTA of
Vita Australia for FDR tax purposes on the Net
Distributions to a New Zealand Unitholder with a
30% illustrative tax rate.
We note the relevant date for determining Vital’s unit
price for FDR purposes of New Zealand Unitholders
who use the annual FDR method is on 1 April for
New Zealand Unitholders with a standard 31 March
balance date. For New Zealand Unitholders who
use the periodic FDR method, it is likely that the
unit price will need to be determined daily for FDR
purposes.
It is difficult to determine what the appropriate
assumption is for the analysis as to whether Vital’s
units will trade at a premium to NTA. Vital is
currently trading at a 21% premium to NTA based
on NTA at 31 December 2019 and unit price as at
14 February 2020, and has traded at an average
quarterly premium to NTA of 4% since listing on the
NZX Main Board. However, during the period since
listing the correlation between Vital’s NTA and its
unit price has been volatile, including trading at
a material discount to NTA for sustained periods.
That volatility is difficult to predict and the Board
has concluded that assuming the historic average of
TABLE 2: SENSITIVITY ANALYSIS: IMPACT OF A DISCOUNT / PREMIUM TO VITAL AUSTRALIA NTA FOR A
NEW ZEALAND UNITHOLDER (30% ILLUSTRATIVE TAX RATE) FOR FDR TAX PURPOSES
Discount to NTA Sensitivity
Assumed
Premium
to NTA
Premium to NTA Sensitivity
Discount/premium to Vital Australia NTA(20)%(10)%(5)%4 %10 %20 %25 %
Impact of the Proposal on New Zealand unitholder with
30% illustrative tax rate
17 %14 %13 %10 %9 %6 %5 %
Note: Analysis based on impact on New Zealand Unitholder with 30% illustrative tax rate post the Proposal. The impact of a discount/premium to NTA for New Zealand Unitholders on
other tax rates is similar – the greater the discount to NTA, the greater the positive impact of the Proposal on Net Distributions, and vice versa where the premium to NTA increases.

4% premium to NTA is reasonable for the purposes
of this analysis. To the extent that Vital’s unit price
trades above or below NTA this would be reflected in
higher or lower FDR income.
Having said that, if Vital trades at a premium to NTA
and this premium increases, Unitholders will benefit
from the increase in unit price, which may offset
the additional tax resulting from the higher Vital
Australia market value. Since initial announcement
of the Proposal on 31 October 2019, Vital’s unit
price has increased by 8% compared to share price
performance of selected listed New Zealand and
Australian REITs of 2% and 4% respectively
12
(as at
14 February 2020).
One-off tax impact in the year of
implementation for New Zealand Unitholders
who use the FDR method
New Zealand Unitholders who use the FDR method
will have a one-off tax impact based on the expected
timing of the Proposal implementation due to the
FDR income calculation methodology.
This impact is described below
13
:
• there is an expected one-off tax benefit for New
Zealand Unitholders who apply the annual FDR
method because no FDR income will arise for
the 2020/2021 tax year as the Unitholders will
not hold units in Vital Australia as at 1 April
2020
14
. This is expected to mean that for the
2020/21 tax year the expected 10% increase
in Net Distributions as a result of the Proposal
will increase to approximately 32% on a one-off
basis for a Unitholder with a 30% illustrative
tax rate based on the illustrative FY20 analysis.
This implies an approximate 1.8 cents per unit
incremental benefit in the 2020/21 tax year; and
• there is expected to be a one-off adverse tax
impact for New Zealand Unitholders who apply
the periodic FDR method because FDR income
will need to be calculated in respect of their
holding in Vital Australia, from the date of
the Proposal. For these Unitholders the 10%
Net Distribution benefit from the Proposal is
expected to reduce to approximately 4%
15
on
a one-off basis for a Unitholder with a 30%
illustrative tax rate based on the illustrative
FY20 analysis. This is because Vital will also
have to reflect income under the FDR method in
respect of certain Australian Properties until 30
June 2020.
Please refer to Schedule 6 - Overview of the New
Zealand Foreign Investment Fund Regime and
Application for New Zealand Unitholders for further
explanation on the FDR calculation methods. The
assumed NTA of Vital Australia as at the beginning
of the income year (i.e., 1 July) with a 4% premium
applied has been used as a proxy for the assumed
market value of Vital Australia for the purposes
of this analysis. As described in the sensitivity
analysis above, if the Vital unit price was to trade at
a premium to NTA above 4% this would result in an
increase in tax under the FDR method which would
reduce the benefit of the Proposal for a New Zealand
Unitholder.
12
Selected New Zealand listed REITs equal-weighted index consisting of: Argosy Property Limited, Goodman Property Trust, Investore Property Limited, Kiwi Property Group, Precinct Properties
New Zealand Limited, Property For Industry Limited, Stride Property Group; Selected Australian listed REITs equal-weighted index consisting of: Arena REIT, Centuria Industrial REIT, Centuria
Office REIT, Charter Hall Education Trust, Charter Hall Long WALE REIT, Dexus, GPT, Growthpoint Properties, Viva Energy REIT; Source: IRESS as at 14 February 2020.
13
This assumes that the relevant Unitholder has a standard 31 March balance date.
14
This does not apply if New Zealand Unitholders sell their units in the year of implementation.
15
This is calculated using an illustrative implementation date of 1 April 2020. The one-off adverse tax impact on New Zealand Unitholders applying the periodic FDR method that have a daily unit
valuation period reduces the later that implementation occurs between 1 April 2020 and 30 June 2020.
FINANCIAL IMPACTS FOR UNITHOLDERS 45
New Zealand Unitholders that are not subject to the FIF regime will be taxed on the
distributions that they receive rather than under the FDR method. Accordingly, they will not
be affected by the adjustments described above. However, distributions received from Vital
Australia will be taxable to these Unitholders.
Fundamentally, the distribution analysis only takes the ongoing impacts of the Proposal into account to provide
Unitholders with an illustrative indication of the expected impact of the Proposal on Net Distributions. There are
a range of one-off capital structure and tax adjustments as part of the Proposal which are not reflected in the
analysis.

46 VITAL HEALTHCARE PROPERTY TRUST NOTICE OF SPECIAL MEETING 2020
The analysis in this Section is illustrative only and actual Unitholder distributions will vary
from the analysis shown. A full year impact of the Proposal has been shown in FY20 for
illustrative purposes only but the Proposal is only expected to be implemented in May/June
2020 and therefore the actual FY20 distribution will not include a full-year impact of the
Proposal.
This analysis is not prospective financial information. The information outlined in this analysis
does not constitute tax advice, or financial product or investment advice. The analysis
has been prepared without reference to the particular investment objectives, financial
situation, taxation position and particular needs of individual Unitholders. The impact of the
Proposal will depend on your specific circumstances. You should seek your own professional
investment, taxation or financial advice from your professional advisers.
Further information on the key assumptions underlying the distribution analysis and the
impact of the Proposal on all New Zealand Unitholder tax brackets and Australian Unitholders
(illustrative 30% tax rate) in FY19 and FY20 is provided in Schedule 2.
What is the impact of the Proposal on
Vital’s gearing and NTA?
The Proposal will result in several adjustments to
Vital’s consolidated statement of financial position.
These include the close-out of Vital’s swap portfolio,
transaction costs funded by debt, and an adjustment
to how the Australian deferred tax liabilities are
calculated. Table 3 below provides an overview of the
key adjustments based on Vital’s reported statement
of financial position as at June 2019 and the impact
on gearing and NTA. Note, the FY20 incentive fee
calculation will be adjusted to exclude any impact
which arises from the implementation of the Proposal
that is unintended or outside the ordinary course of
business.
The net effect of the Proposal is an increase of
approximately 3.1% in Vital’s pro-forma gearing to
38.4%. This is below Vital’s gearing covenant levels
and the Board remains committed to prudent balance
sheet management.
FY19 Restructuring FY19 post-
repor
ted adjustments
R
estructuring
$m $m $m
Assets
Inv
estment properties
1,836

1,836
Other assets 95 95
T
otal assets
1,932

1,932
Liabilities

Borrowings 734 58 792
Deriv
ative financial instruments
50

(50)

0
Deferred tax

91

(29)

62
Current taxation payable 12 (6) 6
Other liabilities 14 14
T
otal liabilities
902

875
T
otal unitholders' funds 1,030 27 1,057
Total liabilities and unitholders' funds 1,932 1,932
Gearing

35.3 %

38.4 %
NTA per unit
2.31

2.37
Note: Gearing based on debt to total assets - calculation in accordance with Vital’s Trust Deed and excludes A$80.3m related party loan which was repaid on 2 August 2019.
TABLE 3: IMPACT OF THE PROPOSAL ON VITAL’S CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(PRO-FORMA 30 JUNE 2019 (FY19))