Vital Infrastructure Property Trust · TSX:VITL.UN
Vital Infrastructure Property Trust — Northwest Healthcare Properties Real Estate Investment Trust — Q2 2020 Earnings Presentation
48 slides from Vital Infrastructure Property Trust's earnings presentation, Aug 24, 2020
Slide 1: Q2 2020 Investor Update
Q2 2020 INVESTOR UPDATE August 24, 2020
Slide 2: Disclaimer
DISCLAIMER This presentation provides a summary description of Northwest Healthcare Properties Real Estate Investment Trust (“NWH” or the “REIT”). This presentation should be read in conjunction with and is qualified in its entirety by reference to the REIT’s most recently filed financial statements
Slide 3: NWH at a Glance
TORONTO Focused Healthcare Real Estate Investment Partner ✓ Global scale, local relationships Partner of choice for leading operators in each of our markets LONDON SÃO PAULO ✓ Defensive operating fundamentals Cure healthcare focus underpinned by government funding ✓ Scalable platform with embedded g
Slide 4: Healthcare Real Estate - Cure vs Care
HEALTHCARE REAL ESTATE - CURE VS CARE GLOBAL Healthcare Real Estate is estimated to be >$3T in value. NORTHWEST focuses on the CURE segment of Healthcare Real Estate. CURE CARE Higher Acuity Lower Acuity Hospital Post-acute Rehab Outpatient Life Sciences Skilled Assisted Living Independent MOB Nursi
Slide 5: Defensive Underlying Portfolio
DEFENSIVE UNDERLYING PORTFOLIO Operating Metrics Diversification 97% 15 yr 7 >2,000 Portfolio Occupancy WALE Countries Tenants 75% Inflation Indexed Acute & Primary Rents STABLE Healthcare Focus OPERATING FUNDAMENTALS > 80% Tenants with Australia’s Leading Government Support Hospital Operator >$350B
Slide 6: COVID-19: Operational KPIs
COVID-19: OPERATIONAL KPIs Rent Collection Business Impact 89.0% 91.1% 100% Q2 Cash July Cash Properties Open Collections Collections 97.6% >80% Q2 Total Tenants with Government Support Collections COVID-19: STRONG KPIs • Reduced traffic impacting parking income • Enhanced government funding to and
Slide 7: Impact of C-19: Strong Support for Healthcare Tenants
IMPACT OF C-19: STRONG SUPPORT FOR HEALTHCARE TENANTS GERMAN MOBS CANADIAN MOBS UK HOSPITALS ▪ Properties remained open ▪ Properties remained open ▪ NHS has contracted albeit with lower traffic as albeit with lower traffic as private hospital capacity some tenants were some tenants were GERMAN HOSPI
Slide 8: 2020 Strategic Priorities: Back to Business
2020 STRATEGIC PRIORITIES: BACK TO BUSINESS ADVANCING AUSTRALASIAN PORTFOLIO EUROPEAN GROWTH OF ASSET STRATEGIC INITIATIVES: MANAGEMENT EXPANSION MANAGEMENT PLATFORM SCALING THIRD PARTY • Completed the sale of non- • UK expansion with the • Entered into definitive core assets to third parties acquis
Slide 9: Australasian Portfolio Management: Simplification Complete
AUSTRALASIAN PORTFOLIO MANAGEMENT: SIMPLIFICATION COMPLETE DIVESTING WHOLLY OWNED AUSTRALASIAN ASSETS SIMPLIFIED PLATFORM WHOLLY OWNED NWH CAPITAL PLATFORMS Total 12 assets $437M $367M sales to capital platforms and 3rd Parties Vital +3 assets +$52M ✓ Status: Closed AUS JV +5 assets +$221M ✓ Status:
Slide 10: London Portfolio: Transaction Overview
LONDON PORTFOLIO: TRANSACTION OVERVIEW THE LONDON Transaction Overview PORTFOLIO • Transaction overview: On August 21st, the REIT completed the acquisition of four high quality hospitals located in the Greater London Area for $452M (£260M; the “London Portfolio”) at a 6.2% initial ACQUISITION SCALES
Slide 11: UK Portfolio: Strategic Fit
UK PORTFOLIO: STRATEGIC FIT Key Portfolio Metrics £358M 80%+ 100% 6.5% Concentration in Of rents indexed UK Portfolio value - Portfolio cap rate London market to inflation Achieving critical mass vs 100% 100% 17 year ~5% Of rent from top 10 Occupancy WALE Market cap rate operators UK Hospital Operat
Slide 12: UK Portfolio: Value Creation Opportunity
UK PORTFOLIO: VALUE CREATION OPPORTUNITY SIGNIFICANT VALUE CREATION UK Value Creation Opportunity OPPORTUNITY THROUGH ACTIVE ASSET MANAGEMENT Active Asset Management JV Funds Formation INITIATIVES AND JV • Attractive seed portfolio: Attractive ~$620M FUND FORMATION • Tenant diversification: Potentia
Slide 13: Strategic Transaction: European Joint Venture
STRATEGIC TRANSACTION: EUROPEAN JOINT VENTURE EUROPEAN JOINT VENTURE € 0.3 B Lower NWH equity requirement €100M (30%) equity Ability to requirement scale Reduced cost over 5 years European of capital platform € 1.7 B Increased Target 60% LTV management fees and promoted Seed Portfolio returns Contra
Slide 14: Strategic Transactions: Corporate Impact
STRATEGIC TRANSACTIONS: CORPORATE IMPACT AFFO/UNIT BRIDGE $0.06 $0.01 $0.01 ($0.05) $0.80 $0.83 Q2 Annualized London Acquisition Europe JV UK JV Deleveraging Target AFFO/Unit AFFO/Unit LTV 56.4% 51.7% Net Debt/EBITDA 9.6x 8.6x 13
Slide 15: Deleveraging
DELEVERAGING LTM LTV Trend Proportionate Net Debt/EBITDA Bridge (0.65x) 0.71x 67% (1.05x) 62% 60.5% -300 bps YOY 59.4% 56.5% 55.9% 56.4% 57% 9.60x 52% 53.7% 8.61x 52.8% 47% 49.6% 49.5% 49.6% 42% Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Consolidated Proportionate Q2-20 Net London Europe JV UK JV Target Net Debt
Slide 16: Global Healthcare Trends
GLOBAL HEALTHCARE TRENDS Ss NORTHWEST
Slide 17: Global Healthcare Market
GLOBAL HEALTHCARE MARKET Trillion Annual Global Healthcare Spend ($US) 10.4% Global Healthcare Expenditure (% GDP) 4-7% Annual Growth $ NORTHWEST HEALTHCARE PROPERTIES
Slide 18: Trends Driving Global Healthcare
TRENDS DRIVING GLOBAL HEALTHCARE 1. Population growth Aging Population 2. Aging population 3. Increase in obesity, addictions 4. Growing middle class in emerging markets 5. Increase in urban migration 1. Consolidation Consolidation 2. Rise in health awareness and spending 3. Higher quality / value c
Slide 19: Healthcare Trends Impact on Healthcare Real Estate
HEALTHCARE TRENDS IMPACT ON HEALTHCARE REAL ESTATE HEALTHCARE TRENDS are driving real estate opportunities. Outpatient / Increased Aging Operator Increasing Urbanization funding population home care consolidation asset size needs Limited Positive Positive Positive Positive Positive Hospitals impact
Slide 20: NWH Platform
NWH PLATFORM ) 1] | ins ih
Slide 21: Northwest Overview
NORTHWEST OVERVIEW GLOBAL HEALTHCARE REAL ESTATE INVESTMENT PARTNER Global Dynamic Capital Capital Relationships Allocation Accretive Strategic Acquisition Opportunities NWH.UN Operator Partnerships Regional LISTED Brownfield Operating Development Platforms TSE Opportunities Healthcare Long Term Pre
Slide 22: Differentiated Strategy
DIFFERENTIATED STRATEGY SCALED $7.3B+ $8.4B $4.0B Platform Fee Bearing Capital Un-deployed Capital 20% CAGR from 2015-2020 JV Partnerships and Vital Trust To be deployed in EUR and AUS Investment CASH FLOW STABILITY EMBEDDED GROWTH 97%+ 14.6 Year 75%+ $327M Occupancy WALE Indexed Development Pipelin
Slide 23: Business Model
BUSINESS MODEL • WALE: 14.6 Years / Occupancy: 97.4% SPNOI (Levered) +5.8% • Inflation Indexed Leases: 75% • Fee Bearing Capital: $8.4B Asset Management +3.3% • Target Capital Commitments: $11.8B Development Accretion • Committed Developments: $327M +0.3% • Development Yield: 100bps spread +9% Annua
Slide 24: Financial Highlights
FINANCIAL HIGHLIGHTS 23
Slide 25: Financial Dashboard
FINANCIAL DASHBOARD As Reported Normalized AFFO/unit (5) $0.80/unit $0.92/unit LTV (6)/ 49.6% / 56.4% ~43% / ~48% Proportionate LTV $12.37/unit ~$12.53/unit NAV (7) $327M +$2.2B $300M Annual Annual JV Debt Developments Deployment Repayment 24
Slide 26: Proportionate Income Statement
PROPORTIONATE INCOME STATEMENT 3.7% AFFO PER UNIT For the Quarter ended June 30 GROWTH DRIVEN BY G&A reduction as a result C$M % change of cost savings measures SPNOI GROWTH, 2019 2020 implemented in conjunction with COVID-19 INCREASED ASSET Net Operating Income (8) 54.8 57.2 4.4% Management Fee Inc
Slide 27: Earnings Growth
EARNINGS GROWTH ANNUAL AFFO/UNIT BRIDGE $0.03 ($0.02) $0.04 ($0.05) $0.80 (8) $0.80 Q2-2019 Annualized Acquisitions SPNOI Deleveraging FX Q2-2020 Annualized Global SPNOI Fee Bearing 300 bps FX Acquisitions Growth AUM Growth Deleveraging Depreciation 26
Slide 28: Proportionate Balance Sheet
PROPORTIONATE BALANCE SHEET 5% NAV PER UNIT GROWTH DRIVEN BY As at June 30 REDUCED LEVERAGE, C$M 2019 2020 % change +$460M Investment Properties 3,511.0 3,971.3 13.1% Proportionate acquisitions IMPROVED PROPERTY Other Assets 315.9 281.1 -11.0% VALUATIONS AND Total Assets 3,826.8 4,252.5 11.1% VALUE
Slide 29: NAV Growth
NAV GROWTH SIGNIFICANT VALUE CREATION ANNUAL NAV/UNIT BRIDGE $0.36 ($0.69) 30% CAGR $1.45 ($0.27) ($0.24) 2,194 1,591 1,312 1,390 $12.37 866 $11.76 519 2015 2016 2017 2018 2019 Q2-20 Q2-19 Global IPP FX Transaction Other Q2-20 NAV/Unit Manager revaluation Costs NAV/Unit Value Creation WACR SPNOI Acc
Slide 30: Liquidity and Balance Sheet Update
LIQUIDITY AND BALANCE SHEET UPDATE WITH TARGET LIQUIDITY LIQUIDITY FORECAST OF ~$384M, NWH IS WELL POSITIONED TO EXECUTE ON ITS $125M ($230M) $300M STRATEGIC PRIORITIES $160M ($125M) THE REIT HAS REPAID $384M OR REFINANCED 100% $154M OF ITS 2020 DEBT $84M MATURITIES ON Q2-20 Europe RCF London RCF PF
Slide 31: Significant Value Creation in Global Asset Manager
SIGNIFICANT VALUE CREATION IN GLOBAL ASSET MANAGER Available AUM NWH Stabilized ~$8.4B OF GLOBAL Status ($B) Capacity ($B) Ownership Term Fees ($M) CAPITAL Active Australian Core Active $3.5 $1.4 30% Perpetuity $20 COMMITMENTS Hospital JV DRIVING SIGNIFICANT Vital Active $1.8 Open 25% Perpetuity $25
Slide 32: Risk Management – Foreign Exchange
RISK MANAGEMENT – FOREIGN EXCHANGE OVER A 10 YEAR PERIOD, FOREIGN EXCHANGE INDEX HAS REMAINED IN- LINE WITH ITS BASE VALUE RENTAL INDEXATION ACTS AS NATURAL CURRENCY HEDGE LOCAL CURRENCY PROPERTY / CORPORATE DEBT TO REDUCE INVESTMENT LTM Currency Impact RISK (4.6%) ($0.05) ($0.57) AFFO/Unit NAV/Unit
Slide 33: Investment Activity
INVESTMENT ACTIVITY 32
Slide 34: Consolidated Investment Activity
CONSOLIDATED INVESTMENT ACTIVITY YTD TRANSACTIONS EUROPEAN PORTFOLIO GROWTH ($M) TRANSACTION TYPE REGION C$M 1,516 152.6% German Hospital Acquisition GER 27 1,054 German Clinic Acquisition GER 31 773 599 Australian Life Sciences Acquisition AUS 96 UK Hospital Portfolio Acquisition UK 169 2018 2019 Q
Slide 35: Accretive Development & Expansion Pipeline
ACCRETIVE DEVELOPMENT & EXPANSION PIPELINE WITH A TRACK • During the quarter, Vital Trust completed two expansion projects in Australia with total project costs and yields equaling ~$33.8M and 6.4% respectively. RECORD OF COMPLETING MORE • ~$326.6M (fully consolidated; $131.9M proportionate) of comm
Slide 36: Portfolio Overview
PORTFOLIO OVERVIEW 35
Slide 37: Asset Mix by Region and Segment
ASSET MIX BY REGION AND SEGMENT ON A PROPORTIONATE Proportionate NOI Diversification BASIS HOSPITALS Q2 2020 Q2 2020 ACCOUNT FOR 55% OF Hospital and MOB Canada NET OPERATING Australasi a Healthcare Facilities 29% 27% INCOME 28% Q2 2019 30% Q2 2019 45% ASSET MIX INCREASING FOCUS REGIONS 55% 49% 51% O
Slide 38: Strategic Relationships and Tenant Diversification
STRATEGIC RELATIONSHIPS AND TENANT DIVERSIFCATION STRATEGIC RELATIONSHIPS ALLOWING FOR BEST- TOP 10 TENANTS BY GROSS RENT(10) IN-CLASS PERFORMANCE TENANT REGION % GROSS RENT • Alberta Health Services (6 Locations): Largest provincial 1 healthcare provider to 4.3 M Healthscope Limited 15.9% Albertans
Slide 39: Case Study #1: AUS JV Expansion & HSO Acquisition
CASE STUDY #1: AUS JV EXPANSION & HSO ACQUISITION Australasian JV Expansion $1.6B (JV expansion) $1.9B deployed between into seed assets, HSO, $1.8B $1.8B (initial $1.5 B and Recent acquisitions (committed commitment) expansion) $1.9 B Target 65% LTV $5.2B JV including available Deployed capacity an
Slide 40: Case Study #2 – Epworth Eastern Hospital, Melbourne
CASE STUDY #2 – EPWORTH EASTERN HOSPITAL, MELBOURNE NON-FOR-PROFIT PRIVATE HEALTHCARE GROUP THAT RAISES FUNDS TO PURCHASE ADVANCED MEDICAL EQUIPMENT, NorthWest has supported Epworth over 15+ years with expansion opportunities, advice and capital. Developments FUND RESEARCH AND have added to the qual
Slide 41: Case Study #3 – Median, Germany
CASE STUDY #3 – MEDIAN, GERMANY Market ~230,000 Leader Patients p.a. ~€940 M 120 LARGEST PRIVATE Revenue Facilities REHABILITATION PROVIDER WITH 120+ ~18,200 ~15,000 Beds/Places Employees FACILITIES ACROSS GERMANY Supporting ongoing MEDIAN Partnership is foundation for MEDIAN seeking reliable real e
Slide 42: Case Study #4 – Rede D'Or, Brazil
CASE STUDY #4 – REDE D’OR, BRAZIL LARGEST PRIVATE HOSPITAL OPERATOR IN BRAZIL WITH 39 HOSPITALS AND 5,900 BEDS Top 5 Global Healthcare Market Top Facilities ‘AAA‘ Strategy BACKED BY GLOBAL • Third largest private healthcare market: $180B p.a. • Major acute-care assets healthcare spending (9% of GDP)
Slide 43: Investment Opportunity
INVESTMENT OPPORTUNITY 42
Slide 44: Relative Valuation
RELATIVE VALUATION THE REIT IS TRADING AT A SIGNIFICANT DISCOUNT TO ITS PEERS ON AN AFFO MULTIPLE BASIS - Based on NWH.UN’s closing unit price of $11.52/unit as of August 21 2020, and normalized AFFO/Unit of $0.92 per year; NWH.UN’s NAV/unit is based on Q2 2020 of $12.37. 43
Slide 45: Investor Factsheet
INVESTOR FACTSHEET Ticker NWH.UN Listed Exchange TSX Distribution Payable Monthly 41% Other Income/ Distribution Type 59% Return on Capital Unit Price (August 21, 2020) $11.52 Market Capitalization ~$2.0B Distribution Yield 7.0% 52-Week Trading Range $6.27-$13.35 Volume Weighted Avg. Price (VWAP) (2
Slide 46: Notes
NOTES 1. Based on NWH.UN’s closing unit price of $11.52/unit as of August 21, 2020. 2. Based on the REIT’s distribution policy of $0.80/unit per annum and normalized Q2 2020 AFFO of $0.92/unit. 3. Based on total assets of NWH, Vital Trust on a fully consolidated basis including post-quarter acquisit
Slide 47: Contact Information
CONTACT INFORMATION NORTHWEST HEALTHCARE PROPERTIES REIT Paul Dalla Lana, Chairman & CEO 416-366-2000 Ext. 1001 Shailen Chande, CFO 416-366-2000 Ext. 1002 46
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