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IMP Notice of Annual Meeting and unitholder update

Friday, 07 November 2008

Please find enclosed a copy of the notice of meeting for the Annual Meeting to be held in Auckland at 11.00am on Tuesday 25 November 2008 at the Guineas 3 room at Ellerslie Events Centre, 80 Ascot Avenue, Greenlane, Auckland.

Enclosed with the notice of meeting are the voting and proxy forms for unitholders to vote on the appointment of an independent director to the Board of the Manager. I urge you to utilise your entitlement to vote for an independent director to the Board of the Manager, one of the key corporate governance initiatives implemented at the 2007 Annual Meeting.

I would also like to take this opportunity to provide you with an update of the Trust’s position and activities as at the end of October 2008. This should be of particular interest to those of you unable to attend the Annual Meeting.

Undoubtedly the last 12 to 18 months have been one of the toughest financial and economic periods in recent history, with unprecedented volatility in both local and global markets. The Trust however has established itself as a defensive owner of property assets in a niche sector with solid underlying fundamentals. It remains New Zealand’s only specialist medical and healthcare property entity listed on the NZSX.

Whilst the Trust has not been totally immune from the impact of the global crisis, it has in fact come through the year with a strong relative performance. The table below shows ING Medical Properties Trust annualised 1, 3 and 5 year total returns to 30 September 2008, as compared to the NZX Property Gross Index and the NZX50 Index, with outperformance by the Trust for each of the periods shown.

 

 Annualised total return ING Medical Properties Trust NZX Property Gross Index NZX50 Index
 1 year -1.4% -15.3%  -26.2%
 3 year 5.6%  4.7% -1.8%
 5 year 13.7% 10.1% 7.5%

 

Source: Forsyth Barr Research - October 2008

This demonstrates the resilience of the Trust during these uncertain times and it remains very well positioned to see through the negative sentiment in the medium-term as core health sector demand drivers remain robust.

It is times like these when investors actively seek a property investment vehicle that has defensive attributes such as those exhibited by the Trust. These characteristics are supported by the strength and underlying growth in the health and medical industry. To this end, ING Medical Properties Trust is committed to maintaining:

  • A quality, diversified property portfolio;
  • Strong tenant covenants; 
  • Long (and market leading) weighted average lease term; 
  • Embedded rental growth;
  • Little or no development exposure;
  • High occupancy levels and low risk lease expiry profile;
  • A conservative gearing position in the current climate and a strong balance sheet; and
  • Strong corporate governance, an experienced management team, and frequent unitholder communications.

Against the current market headwinds we remain very busy and continue to actively manage all aspects of the portfolio. I am pleased to confirm that in recent weeks we have unconditionally secured two tenants to the portfolio. The first is a corporate tenant for 713 square metres at Ascot Central, Greenlane, for an initial four-year lease term with a commencement date of 1 November 2008. Whilst not a medical tenant, we always envisaged that Ascot Central would be occupied by both corporate and medical-related businesses and this tenant’s exceptional lease covenant sits well within the Trust’s portfolio. To date, over 50% of Ascot Central is occupied by medical tenants and there remains a strong level of enquiry from health industry professionals. The second tenant secured is at Eastmed St Heliers, where ESL Biosciences, a boutique marketer of in-vitro diagnostics and specialist medical scientific instrumentation, has leased 152 square metres for a term of three years from 1 December 2008.

Allowing for all new lease commitments to 31 October 2008, the Trust’s portfolio occupancy has improved from 94.3% as at 30 June 2008 to 95.7%.

Through the course of the year the Board and the Manager have closely monitored the local financial and economic issues and global credit crisis facing us all. We continue to err on the side of caution in relation to the Trust’s gearing and financial position. The Trust’s bank facility is locked in through to March 2011, which confirms that the Trust’s banking arrangements are in excellent order and that the bank fully supports the position, activities and requirements of the Trust.

All things being equal, the core portfolio is expected to continue to perform well over the remainder of the year and the Board envisages a cash distribution at least in line with the cash distribution for the 2008 financial year of 8.5 cents per unit. I am therefore pleased to advise that the first quarter net distribution to unitholders for the 2009 financial year of 2.125 cents per unit was approved by the Board for payment on 8 December 2008. A discount of 1% will be applied in the calculation of the strike price for those participating in the distribution reinvestment plan.

Prior to Christmas we will be issuing the final investor newsletter for the year, providing a further update on the activities of the Trust and an overview of the Annual Meeting for those of you unable to attend. Until then, please visit our new look website, www.ingmedicalproperties.co.nz for up-to-date news releases and information on the Trust.

Again I’d like to thank all unitholders for your continued support, and I confirm the Board and management remain fully focused in delivering the best possible returns for you.

 

Yours sincerely

ING Medical Properties Limited

 

Bill Thurston  

Chairman          

- ENDS -

 

 

                                                                                                                                                                                                                                                                 

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