Vital Infrastructure Property Trust · TSX:VITL.UN
Vital Infrastructure Property Trust — Northwest Healthcare Properties Real Estate Investment Trust — Q3 2020 Earnings Presentation
46 slides from Vital Infrastructure Property Trust's earnings presentation, Nov 12, 2020
Slide 1: Q3 2020 Investor Update
Q3 2020 INVESTOR UPDATE November 12, 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 LONDON SÃO PAULO ✓ Defensive operating fundamentals Cure focus underpinned by government funding ✓ A proven track record 10+ year total shareholder return of 151% (9.
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: Healthcare Real Estate in Spotlight
HEALTHCARE REAL ESTATE IN SPOTLIGHT RELATIVE TOTAL SHAREHOLDER RETURN (YTD)¹ PROJECTED OPERATING PERFORMANCE BY SECTOR2 ’20E – ’24E GSA NOI Growth Projections 110% 110% (3.1)% 9.1% 6.2% 6.2% 6.0% 100% (4.0)% 100% 8.2% 90% (12.4)% (1.4)% Return TotalReturn 90% 4.1% 80% (18.5)% (11.2)% 3.6% 80% (14.3)
Slide 6: Defensive Underlying Portfolio
DEFENSIVE UNDERLYING PORTFOLIO Operating Metrics Diversification 97% 15 yr 7 >2,000 Portfolio Occupancy WALE Countries Tenants 73% Inflation Indexed Acute & Primary Rents STABLE Healthcare Focus OPERATING FUNDAMENTALS > 80% Tenants with Australia’s Leading Government Support Hospital Operator >$350B
Slide 7: COVID-19: Operational KPIs
COVID-19: OPERATIONAL KPIs Rent Collection Business Impact 93.0% 97.9% 100% Q3 Cash October Cash Properties Open Collections Collections 97.6% 98.1% >80% Q3 Total October Total Tenants with Collections Collections Government Support COVID-19: STRONG KPIs • Enhanced government funding to • Reversal o
Slide 8: Achievement of Initial 2020 Objectives
ACHIEVEMENT OF INITIAL 2020 OBJECTIVES Q1 Q2 Q3 Q4 $96M $278M $195M GROWTH IN ASSET MANAGEMENT ✓ JV acquisition of Australian life sciences asset Disposition of German Clinics to European JV Disposition of Dutch MOBs to European JV $167M $450M ✓ EUROPEAN BMI Portfolio London Portfolio acquisition ac
Slide 9: Strategic Transaction Complete: European Joint Venture
STRATEGIC TRANSACTION COMPLETE: EUROPEAN JOINT VENTURE DIVESTING WHOLLY OWNED EUROPEAN ASSETS GENERATES PROMOTED RETURNS WHOLLY OWNED NWH CAPITAL PLATFORMS German Total 13 assets €305M $473M 70% Sold to European Joint Venture Clinics +8 assets +$278M Status: ✓ Closed Q3 • Capital generated: $150M of
Slide 10: Strategic Transaction: UK Value Creation & JV Formation
STRATEGIC TRANSACTION: UK VALUE CREATION & JV FORMATION KEY PORTFOLIO METRICS JV FUNDS FORMATION & IMPACT £358M ($620M) 6.5% 100% Growth in Asset Increased UK Portfolio value - Of rents indexed Management Acquisition Portfolio cap rate Achieving critical mass to inflation Platform Capacity vs 100% ~
Slide 11: Liquidity and Balance Sheet Update
LIQUIDITY AND BALANCE SHEET UPDATE 2021 DEBT MATURITIES $1.1B OF DEBT IS 2021 Debt Maturities $1,105M Comments MATURING IN 2021, Completed Repayments ($298M) Vital facility repaid with equity raise and existing liquidity 43% HAS ALREADY BEEN REPAID, Completed Refinancings ($108M) $39M Cdn mtg’s and
Slide 12: Deleveraging
DELEVERAGING LTV Trend Proportionate Net Debt/EBITDA Bridge (0.7x) -500 bps YOY (1.4x) Forecast 60.5% (0.2x) 57.6% 56.5% 55.9% 56.4% 55.5% 50.6% 10.2x 9.5x 52.8% 52.6% 49.3% 7.9x 50.5% 49.6% 49.5% 49.6% 44.9% 43.8% Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Completed Planned Asset Mgm't Q3-20 Net Completed PF Ne
Slide 13: Global Healthcare Trends
GLOBAL HEALTHCARE TRENDS Ss NORTHWEST
Slide 14: Global Healthcare Market
GLOBAL HEALTHCARE MARKET Trillion Annual Global Healthcare Spend ($US) 10.4% Global Healthcare Expenditure (% GDP) 4-7% Annual Growth $ NORTHWEST HEALTHCARE PROPERTIES
Slide 15: 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 16: 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 17: NWH Platform
NWH PLATFORM ) 1] | ins ih
Slide 18: Differentiated Strategy
DIFFERENTIATED STRATEGY SCALED $7.4B+ $8.5B $4.0B Platform Fee Bearing Capital* Un-deployed Capital 21% CAGR from 2015-2020 JV Partnerships and Vital Trust To be deployed in EUR and ANZ Investment CASH FLOW STABILITY EMBEDDED GROWTH 97%+ 14.5 Year 73%+ $348M Occupancy WALE Indexed Development Pipeli
Slide 19: Business Model
BUSINESS MODEL • WALE: 14.5 Years / Occupancy: 97.2% SPNOI (Levered) +5.8% • Inflation Indexed Leases: 73% • Fee Bearing Capital*: $8.5B Asset Management +3.6% • Target Capital Commitments: $12.0B Development Accretion • Committed Developments: $348M +0.3% • Development Yield: 100bps spread +10% Ann
Slide 20: Financial Highlights
FINANCIAL HIGHLIGHTS 19
Slide 21: Financial Dashboard
FINANCIAL DASHBOARD As Reported Normalized AFFO/unit (5) $0.90/unit $0.92/unit LTV (6)/ 52.6% / 57.6% 43.8% / 49.3% Proportionate LTV $12.27/unit ~$13.11/unit NAV (7) Accretive JV Debt Developments Deployment Repayment 20
Slide 22: Proportionate Income Statement
PROPORTIONATE INCOME STATEMENT ~5% AFFO PER UNIT For the Quarter ended September 30 GROWTH DRIVEN BY C$M 2019 2020 % change SPNOI growth & SPNOI GROWTH & Net Operating Income 58.4 60.0 2.7% accretive investment activity Management Fee Income 7.9 11.0 40.0% INCREASED Interest Income 2.2 0.8 -61.7% MA
Slide 23: Earnings Growth
EARNINGS GROWTH ANNUAL AFFO/UNIT BRIDGE $0.03 ($0.02) ($0.03) $0.05 $0.90 $0.86 Q3-2019 Annualized Acquisitions SPNOI Deleveraging FX Q3-2020 Annualized Global SPNOI Fee Bearing 290 bps FX Acquisitions Growth AUM Growth Deleveraging Depreciation 22
Slide 24: Proportionate Balance Sheet
PROPORTIONATE BALANCE SHEET ~4% NAV PER UNIT GROWTH DRIVEN BY As at September 30 REDUCED LEVERAGE, C$M 2019 2020 % change +$65M Investment Properties 3,870.6 4,091.1 5.7% YoY Fair Value Gain IMPROVED PROPERTY Other Assets 296.2 503.5 70.0% VALUATIONS AND Total Assets 4,166.8 4,594.6 10.3% VALUE CREA
Slide 25: NAV Growth
NAV GROWTH HISTORICAL NAV TREND PF NAV/UNIT BRIDGE $0.41 ($0.70) 28% CAGR $1.45 $0.84 ($0.40) ($0.33) 2,178 $13.11 1,591 1,390 $12.27 1,312 $11.84 866 519 2015 2016 2017 2018 2019 Q3-20 Q3-19 Global IPP revaluation FX Transaction Other Q3-20 Asset Mgm't & PF NAV/Unit Manager Costs NAV/Unit Dev't NAV
Slide 26: Significant Value Creation in Global Asset Manager
SIGNIFICANT VALUE CREATION IN GLOBAL ASSET MANAGER Available AUM NWH Stabilized ~$8.5B OF GLOBAL Status ($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 $1.9 Open 25% Perpetuity $25
Slide 27: 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 (2.6%) ($0.03) ($0.70) AFFO/Unit NAV/Unit
Slide 28: Investment Activity
INVESTMENT ACTIVITY 27
Slide 29: Consolidated Investment Activity
CONSOLIDATED INVESTMENT ACTIVITY YTD TRANSACTIONS EUROPEAN PORTFOLIO GROWTH ($M) TRANSACTION TYPE REGION C$M 1,561 160.6% German Hospitals & Clinics Acquisition GER 59 1,054 Dutch Clinics & MOBs Acquisition NL 11 773 599 Australian Life Sciences Acquisition AUS 96 UK Hospital Portfolios Acquisition
Slide 30: Accretive Development & Expansion Pipeline
ACCRETIVE DEVELOPMENT & EXPANSION PIPELINE • ~$347.8M (fully consolidated; $149.6M proportionate) of committed low risk development & WITH A TRACK expansions in Australasia, Europe, Brazil and Canada to be funded through a combination of existing resources and property financing RECORD OF ▪ $258.6M
Slide 31: Portfolio Overview
PORTFOLIO OVERVIEW 30
Slide 32: Asset Mix by Region and Segment
ASSET MIX BY REGION AND SEGMENT ON A PROPORTIONATE Proportionate NOI Diversification BASIS HOSPITALS Q3 2020 Q3 2020 ACCOUNT FOR 55% OF Australasia Canada MOB NET OPERATING 26% 29% INCOME 32% Q3 2019 28% Hospital and Q3 2019 Healthcare Facilities 45% INCREASING FOCUS REGIONS 52% ASSET MIX 48% 55% ON
Slide 33: Strategic Relationships and Tenant Diversification
STRATEGIC RELATIONSHIPS AND TENANT DIVERSIFCATION STRATEGIC RELATIONSHIPS ALLOWING FOR BEST- TOP 10 TENANTS BY GROSS RENT(9) IN-CLASS PERFORMANCE TENANT REGION % GROSS RENT • Alberta Health Services (6 Locations): Largest provincial 1 healthcare provider to 4.3 M Healthscope Limited 14.9% Albertans
Slide 34: Case Study #1: London Portfolio Acquisition
CASE STUDY #1: LONDON PORTFOLIO ACQUISITION 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 S
Slide 35: Case Study #2: AUS JV Expansion & HSO Acquisition
CASE STUDY #2: 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 36: Case Study #3 – Epworth Eastern Hospital, Melbourne
CASE STUDY #3 – 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 37: Case Study #4 – Australasian Portfolio Simplification
CASE STUDY #4 – AUSTRALASIAN PORTFOLIO SIMPLICATION DIVESTING WHOLLY OWNED AUSTRALASIAN ASSETS SIMPLIFIED PLATFORM WHOLLY OWNED NWH CAPITAL PLATFORMS Total 12 assets $480M $422M sales to capital platforms and 3rd Parties Vital +3 assets +$52M ✓ Status: Closed AUS JV +5 assets +$263M ✓ Status: Closed
Slide 38: Case Study #5 – Median, Germany
CASE STUDY #5 – 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 39: Case Study #6 – Rede D'Or, Brazil
CASE STUDY #6 – 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 40: Investment Opportunity
INVESTMENT OPPORTUNITY 39
Slide 41: 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 42: Relative Valuation
RELATIVE VALUATION THE REIT IS TRADING AT A DISCOUNT TO ITS PEERS ON AN AFFO MULTIPLE BASIS - Based on NWH.UN’s closing unit price of $11.82/unit as of November 12, 2020, and normalized AFFO/Unit of $0.92 per year; NWH.UN’s NAV/unit is based on Q3 2020 of $12.27. 41
Slide 43: Investor Factsheet
INVESTOR FACTSHEET Ticker NWH.UN Listed Exchange TSX Distribution Payable Monthly 41% Other Income/ Distribution Type 59% Return on Capital Unit Price (November 12, 2020) $11.82 Market Capitalization ~$2.1B Distribution Yield 6.8% 52-Week Trading Range $6.27-$13.35 Volume Weighted Avg. Price (VWAP)
Slide 44: Notes
NOTES 1. Based on NWH.UN’s closing unit price of $11.82/unit as of November 12, 2020. 2. Based on the REIT’s distribution policy of $0.80/unit per annum and normalized Q3 2020 AFFO of $0.92/unit. 3. Based on total assets under management of NWH, Vital Trust on a fully consolidated basis including po
Slide 45: 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 44
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