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VHP Update

December 8, 2010

VHP Update

Leading up to the Vital Healthcare Property Trust (VHP) rights issue, Logic Fund Management issued a flash note recommending stock holders to take advantage of the forced selling on the market in late November.   The notes were trading at NZ $1.29 which was more than 20.00% above the rights issue price at $1.05.  Now that the trading has settled and the stock price reduced we update our position from sell to hold.

Current Situation

As was expected, the share price fell to match the rights issue price of $1.05.   Due to this sell off, the value of the stock has changed and we now recommend holding onto VHP as it is now trading at a value enhanced price.

Logic Analysis:  Hold

In our analysis the current Cash Distribution per Unit (CDPU) is approximately 8.3 cents increasing the yield to approximately 11.50%.  With the stock now stabilising at 1.05 we see no reason to continue to sell, as VHP is now priced in line with the other listed property trusts.  The rights issue closes on December 13.

VHP is currently less exposed to risk due to the success of the recent rights issue, but at the same time, investors will not reap the long term benefits of the rights issue immediately.   Keep abreast of company news as this event settles out.

Disclaimer:

The information and any opinions herein are based upon sources believed reliable, but Logic Fund Management and its directors make no representations as to its accuracy or completeness.  All opinions reflect our judgment on the date of this report and are subject to change without notice.  The information contained in this publication should not be used as a basis for making an investment decision about any particular company. Professional investment advice should be taken before making an investment.  Past performance is not a reliable guide to future performance.  Disclosure statements available on request.


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