Vital Infrastructure Property Trust · TSX:VITL.UN
Vital Infrastructure Property Trust — NorthWest Healthcare Properties Real Estate Investment Trust — Q2 2019 Earnings Presentation
56 slides from Vital Infrastructure Property Trust's earnings presentation, Aug 8, 2019
Slide 1: Q2 2019 Investor Update
Q2 2019 INVESTOR UPDATE August 8, 2019
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: Core Healthcare Infrastructure in Major Markets
CORE HEALTHCARE INFRASTRUCTURE IN MAJOR MARKETS TORONTO NorthWest Healthcare Properties Real Estate AUCKLAND Investment Trust (TSX: NWH.UN) is a SÃO PAULO specialist healthcare real estate investor that owns a high quality portfolio of medical office and hospital properties located MELBOURNE through
Slide 4: Differentiated Strategy
DIFFERENTIATED STRATEGY EXPERIENCED AND ALIGNED MANAGEMENT TEAM Management Healthcare Real Estate Deep Expertise Specialists Relationships Aligned leadership with a team of Pure play healthcare real estate Leading tenant relationships and healthcare real estate experts and infrastructure operational
Slide 5: Highlights of the Quarter
HIGHLIGHTS OF THE QUARTER DELIVERING STABLE Delivering stable and improving operating results AND IMPROVING Normalized AFFO per unit increased by $0.02 to $0.92 and steady IPP portfolio revaluation uplift OPERATING RESULTS Source currency adjusted cash SPNOI growth of 1.8% YOY Occupancy of 9
Slide 6: Executing on Strategic Priorities
EXECUTING ON STRATEGIC PRIORITIES 5
Slide 7: Strategic Transactions & Relationships
STRATEGIC TRANSACTIONS & RELATIONSHIPS Strategic Transactions Merger with NorthWest International: In 2015, the REIT acquired NorthWest International (“NWI”) and it’s international portfolio of healthcare real estate located in Australia, New Zealand, Brazil, and Germany. The merger with NWI launc
Slide 8: Healthscope Investment Highlights
HEALTHSCOPE INVESTMENT HIGHLIGHTS CORE HEALTHCARE INFRASTRUCTURE IN MAJOR MARKETS Transformational 11 property, $1.2BN transaction solidifies the REIT as the leader in Australian healthcare real estate NORWEST Highly complimentary to NWH’s existing portfolio Deepens relationship with Australia
Slide 9: Healthscope Acquisition: Funding and Accretion
HEALTHSCOPE ACQUISITION: Funding and Accretion NWH’S PARTICIPATION IN THE HEALTHSCOPE TRANSACTION WAS FULLY FUNDED THROUGH ITS A$1.258 Bn Price @ 5% Cap (ex. trans. costs) − A$808M Senior debt facility ~3.0% interest rate = A$450M Total Equity DERIVATIVE INVESTMENT $880M New Fee Bearing Capital A$13
Slide 10: Significant Value Creation in ANZ Manager
SIGNIFICANT VALUE CREATION IN ANZ MANAGER DEPLOYED NWH MANAGES A INSTITUTIONAL JV INSTITUTIONAL JV AUSTRALIAN A$5.5BN AUSTRALASIAN UPSIZE** & UNDEPLOYED PLATFORM PLATFORM INCLUDING ~A$3.6BN OF FEE AUM (in C$M) $491(*) $1,623 $1,800 $1,600 > $5,500 BEARING CAPITAL NWH Ownership VITAL FEE AND 24.9% 30
Slide 11: Growth Through Capital Relationships
GROWTH THROUGH CAPITAL RELATIONSHIPS OPPORTUNITY TO Healthcare real estate is an attractive investment for long-term institutional capital LEVERAGE A Defensive healthcare fundamentals support high occupancy and long term indexed leases DIFFERENTIATED High quality, new generation healthcare fac
Slide 12: Portfolio Overview
P O RT F O L I O O V E RV I E W 11
Slide 13: Portfolio Overview
PORTFOLIO OVERVIEW $6.2Bn International Platform C A N A D A B R A Z I L LEADING MEDICAL STRONG RELATIONSHIPS OFFICE BUILDING WITH LEADING PLATFORM OPERATORS 55 PROPERTIES 8 PROPERTIES SP NOI Growth (8) 0.6% SP NOI Growth (8) 4.0% 1,050 TENANTS 8 TENANTS Occupancy 92.7% FITCH AAA+ RATED Occupancy 10
Slide 14: 2019 YTD Summary of Investment Activity
2019 YTD SUMMARY OF INVESTMENT ACTIVITY Significant Transaction Activity in 2018 continues into 2019 Q4 2018 Completed Transactions YTD 2019 $115M of completed transactions in Q4 (Europe and Australasia), In Q2 the REIT completed the acquisition of 11 high quality properties (the HSO totaling ~$550M
Slide 15: Portfolio Diversification
PORTFOLIO DIVERSIFICATION NOI DIVERSIFICATION TOP 10 TENANTS BY PERCENTAGE OF GROSS RENT (10) GEOGRAPHICALLY BY GEOGRAPHY (4) DIVERSIFIED Q2 2019 % of Gross Tenant Region PORTFOLIO OF CORE Rent 17% HEALTHCARE REAL 1 Australasia Canada Healthscope Limited 13.6% ESTATE ASSETS IN Q2 2018 28% 2 STABLE A
Slide 16: Representative Transactions
REPRESENTATIVE TRANSACTIONS Healthscope Sturgeon Medical Significant European Transaction Hospital Morumbi Centre Acquisition Pipeline Complete Complete Compete Ongoing Complete Ongoing In June, 2019, NWH completed the acquisition of Size 233,000 Square Feet Size 45,000 Square Feet Transaction 11 hi
Slide 17: Accretive Development & Expansion Pipeline
ACCRETIVE DEVELOPMENT & EXPANSION PIPELINE ~$414M (fully consolidated; $173M proportionate) of committed low risk development & WITH A TRACK expansions in Australasia, Brazil and Canada to be funded through a combination of RECORD OF existing resources and property financing COMPLETING MORE – $326
Slide 18: Financial Overview
ANCIAL SOVERVIEW at _— - eS ee
Slide 19: Q2-19 Financial Dashboard
Q2-19 FINANCIAL DASHBOARD As Reported Normalized Target Deliver stable property operating Track to management run rate and Reflects completed and/or contracted performance, cash flow and guidance investment and finance activity as well distributions Completion of the committed as normalized
Slide 20: Financial Highlights - Profitability
FINANCIAL HIGHLIGHTS - PROFITABILITY POSITIVE OPERATING Q2-19 Q2-19 RESULTS IN LINE WITH As Reported Normalized MANAGEMENT NOI $70.5M $76.3M GUIDANCE FFO $31.1M $34.2M NORMALIZED RESULTS AFFO $30.4M $34.6M HAVE BEEN ADJUSTED W.A Units 135,305 149,683 Outstanding TO REFLECT THE IMPACT OF RECENTLY Ann
Slide 21: Financial Highlights - Capitalization
FINANCIAL HIGHLIGHTS - CAPITALIZATION Q1-19 Q2-19 Q2 2019 NAV/UNIT WAS As Reported As Reported NEGATIVELY IMPACTED BY Gross Book Value $5,142.8 $5,174.3 ADVERSE F/X Debt $2,378.7 $2,341.0 MOVEMENTS ACROSS THE Convertible REIT’S PORTFOLIO, FV Debentures $422.8M $424.9M CONVERTS, AN EQUITY Other $763.
Slide 22: Balance Sheet Optimization and Regional Debt Strategy
BALANCE SHEET OPTIMIZATION AND REGIONAL DEBT STRATEGY BALANCE SHEET OPTIMIZATION DEBT MATURITY PROFILE (9) Recent Financing Activity 800,000 6% 700,000 4.93% $166M (net) equity offering closed July 31st ; proceeds used to repay 4.65% 5% 600,000 4.44% 4.09% $142M of high cost debt (incl. notice to
Slide 23: Impact of Recent Financing Activity
IMPACT OF RECENT FINANCING ACTIVITY SOURCES & USES - JULY FINANCING RECENT FINANCING ACTIVITY IS ACCRETIVE Source of Funds Use of Funds TO AFFOPU AND (000,000s) Int. rate Acquisitions $61.5 5.8% REDUCES OVERALL Equity offering* Brazil Financing $165.7 190.0 7.8% 3.9% Series C - convert 38.8 7.3% LEV
Slide 24: Risk Management – Foreign Exchange
RISK MANAGEMENT – FOREIGN EXCHANGE OVER A 10 YEAR PERIOD, PORTFOLIO 150 INDEX HAS REMAINED 140 RELATIVELY IN-LINE 130 WITH ITS BASE VALUE 120 110 100 RENTAL INDEXATION 90 93 ACTS AS NATURAL 80 70 73 CURRENCY HEDGE 60 50 LOCAL CURRENCY Apr-16 Sep-16 Feb-17 Mar-19 Apr-11 Sep-11 Feb-12 Mar-14 Jan-15 Ju
Slide 25: Capital Markets Summary
CAPITAE MARKETS SUMMARY Ss NORTHWEST
Slide 26: Relative Valuation
RELATIVE VALUATION THE REIT IS TRADING AFFO Multiple 20.0x AT SIGNIFICANT DISCOUNT TO ITS 15.0x 16.6x $19.31 PEERS ON AN AFFO $15.24 14.0x 12.6x MULTIPLE BASIS 10.0x $12.85 $11.55 5.0x 0.0x NWH.UN Canadian REITS Internationally Focused US Healthcare REITS (EV > $1BN) Canadian REITS (Top 5) 20.0% $13
Slide 27: Investor Factsheet
INVESTOR FACTSHEET Ticker NWH.UN Listed Exchange TSX Distribution Payable Monthly 55% Return of Capital / Distribution Type 45% Capital Gains Unit Price (August 6, 2019) $11.55 Market Capitalization ~$1.7Bn Distribution Yield 6.9% 52-Week Trading Range $9.10- $12.30 Volume Weighted Avg. Price (VWAP)
Slide 28: Investment Thesis
A P P E N D I X 1 INVESTMENT THESIS 27
Slide 29: Healthcare Real Estate Thesis
HEALTHCARE REAL ESTATE THESIS Favourable demographics and industry trends Supportive • • Aging populations Fundamentals • Rising healthcare expenditures Defensive core healthcare infrastructure Attractive • • Global gateway cities Asset Class • Leading healthcare operators • Significant internal and
Slide 30: Key Drivers of Health Care Real Estate
KEY DRIVERS OF HEALTH CARE REAL ESTATE Aging Population >65 population cohort growing rapidly in developed countries > 656mm people worldwide over 65 by 2021, ~11.5% of global population Consolidation & Cost Increased Healthcare The Rise of Private Savings Spending Healthcare Scale required fo
Slide 31: Healthcare Real Estate Opportunities
HEALTHCARE REAL ESTATE OPPORTUNITIES • NWH’s markets comprise a total population of ~350 million, slightly larger than the United States NWH’s Market • Total healthcare real estate opportunity estimated to be comparable to the US Opportunity (~$1 Trillion) across NWH’s markets • Significant potentia
Slide 32: Financial Metrics
A P P E N D I X 2 FINANCIAL METRICS 31
Slide 33: Transformational Growth Continues
TRANSFORMATIONAL GROWTH CONTINUES 7,000 $6,240 6,000 Total Book Value of Assets (C$M) $5,072 5,000 $4,684 4,000 $3,329 3,000 $2,700 2,000 $1,282 $1,315 $1,245 $1,012 1,000 $746 $572 - IPO 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 NWI Investment and Canadian Medical Office Building (MOB) Cons
Slide 34: Financial and Operational Metrics
FINANCIAL AND OPERATIONAL METRICS GROSS BOOK VALUE PORTFOLIO QUALITY GBV has increased from $4.9Bn to $6.2Bn, a 21.3% YoY increase Portfolio quality improved – occupancy up to 97.2% with WALE increasing to 14.0 years Normalized GBV +21.3% YoY Occupancy +1.7 yrs YoY 7.0 6.2 98.0% 97.2% 14.5 6.0 9
Slide 35: Financial and Operational Metrics
FINANCIAL AND OPERATIONAL METRICS FINANCIAL PROFILE CAPITALIZATION Normalized AFFOPU of $0.92 results in a ~87% payout ratio Consolidated LTV (Incl. Converts) is 53.7% (80 bp QoQ) Normalized AFFO per Unit 60% 56.1% 55.7% 55.7% 1.00 0.90 0.92 100% 54.5% 53.7% 0.89 0.88 0.88 55% 0.90 50.2% 49.4% 0
Slide 36: Regional Portfolio Overviews
A P P E N D I X 3 REGIONAL PORTFOLIO OVERVIEWS 35
Slide 37: Portfolio Profile
PORTFOLIO PROFILE PORTFOLIO GLOBAL HEALTHCARE REAL ESTATE INFRASTRUCTURE COMPRISES 169 PROPERTIES Q1 2019 Canada Brazil Europe Vital Trust NWAUS Platform* TOTALING 13.8M SQUARE FEET OF GLA IN SIX COUNTRIES Number of 55 8 35 45 26 169 Properties STRONG OPERATING 89% MOB & 21% MOB & 23% MOB & 46% MOB
Slide 38: Canada: Largest Portfolio of MOB Assets
CANADA: LARGEST PORTFOLIO OF MOB ASSETS INVESTMENT AND MARKET OVERVIEW Canada’s largest non-government owner/manager of MOBs and healthcare related facilities YT Portfolio of 55 properties comprising GLA of 3.4 million sf and NT 1,050 tenants NU 92.7% occupancy and ~5.0 year WALE High qualit
Slide 39: Brazil: Newly Built Private Pay Hospital Assets
BRAZIL: NEWLY BUILT PRIVATE PAY HOSPITAL ASSETS INVESTMENT AND MARKET OVERVIEW Institutional quality, core healthcare infrastructure assets in strategic markets including São Paulo, Brasilia and Rio de Janeiro RORAIMA 100.0% occupancy and 19.8 year WALE AMAPÁ Stable cash flow with long-term, t
Slide 40: Europe: Strategically Located MOB Assets
EUROPE: STRATEGICALLY LOCATED MOB ASSETS INVESTMENT AND MARKET OVERVIEW High quality MOB assets located in the major markets including Berlin, The Netherlands SCHLESWIG- Hamburg, Frankfurt, Ingolstadt, Leipzig and Rotterdam 2 HOLSTEIN 97.2% occupancy and ~15.1 year WALE MECKLENBURG-WESTERN POMER
Slide 41: Australasia (1): Major Market Hospital and MOB Portfolio
AUSTRALASIA (1): MAJOR MARKET HOSPITAL AND MOB PORTFOLIO PORTFOLIO OVERVIEW Northwest Healthcare Properties Australia REIT “NWHP AUS” owns a leading Australian healthcare real estate portfolio with over $600M in existing assets Portfolio of 26 Properties of ~2.8M Square Feet Epworth Victoria Par
Slide 42: Australasia (2): Strategic Investment in Vital Trust
AUSTRALASIA (2): STRATEGIC INVESTMENT IN VITAL TRUST INVESTMENT AND MARKET OVERVIEW Manager and 24.9% strategic shareholder of Vital Trust (NZX:VHP), AUSTRALIA Australasia’s largest listed healthcare real estate owner with 26 private hospitals, 10 MOBs, 5 aged care assets and 4 development lots
Slide 43: Property Case Studies
A P P E N D I X 4 PROPERTY CASE STUDIES 42
Slide 44: Case Study #1 - Epworth Eastern Hospital, Melbourne
CASE STUDY #1 - EPWORTH EASTERN HOSPITAL, MELBOURNE Development of a Healthcare Precinct Co-located private hospital Epworth Eastern Private Public hospital initial Public and private hospitals development attracts Hospital announces major demand catalyst drive health precinct specialists expansion
Slide 45: Case Study #1 – Epworth Eastern Hospital, Melbourne
CASE STUDY #1 – EPWORTH EASTERN HOSPITAL, MELBOURNE Development of a Healthcare Precinct Epworth Eastern Private Public hospital initial Private hospital development Public and private hospitals Hospital announces major demand catalyst leads to formation of precinct drive health precinct expansion 1
Slide 46: Case Study #2 – Median, Germany
CASE STUDY #2 – MEDIAN, GERMANY SCALED EUROPEAN PLATFORM PROVIDED Market ~230,000 ACCESS TO PARTICIPATE Leader Patients p.a. IN RECENT ~€940 M 120 CONSOLIDATION Revenue Facilities TRENDS ~18,200 ~15,000 Beds/Places Employees German Fragmented Private Equity NorthWest Rehabilitation Market Leads to A
Slide 47: Case Study #2 – Median, Germany
CASE STUDY #2 – MEDIAN, GERMANY Supporting ongoing Partnership is foundation MEDIAN seeking reliable real MEDIAN expansion with for continuous acquisition estate partners Who is MEDIAN? SLB transactions pipeline Largest private rehabilitation provider 2017 Present Future with 120+ facilities acros
Slide 48: Case Study #3 – Rede D'Or, Brazil
CASE STUDY #3 – REDE D’OR, BRAZIL PLATFORM GROWTH HAS Top 5 Global Healthcare Market NorthWest's Brazilian Portfolio has Scaled Significantly ALLOWED NWH TO Third largest private healthcare market: $180BN REMAIN A KEY CAPITAL p.a. healthcare spending (9% of GDP) NorthWest owns 8 hospitals totali
Slide 49: Case Study #4 – Healthe Care, Australia
Case study #4 – Healthe Care, Australia Driving growth through relationships 2019 Third largest for-profit private hospital operator 2006 2016 2017 in Australia Commenced healthcare operations with the Acquired by pan-Asian health services group that is exploring Acquired portfolios of 18 hospitals
Slide 50: Management Biographies
A P P E N D I X 5 MANAGEMENT BIOGRAPHIES 49
Slide 51: Global Platform with Regional Capability and Expertise
GLOBAL PLATFORM WITH REGIONAL CAPABILITY AND EXPERTISE FULLY ESTABLISHED, CORPORATE MANAGEMENT REGIONAL OPERATING PLATFORM AND EXPERTISE SCALABLE REGIONAL TEAMS WITH EXPERTISE IN Paul Dalla Lana Gerson Amado Leads NWH’s Brazilian Founder of NWH & NWI REITs platform HEALTHCARE PROPERTY Chairman &
Slide 52: Notes
NOTES 1. Based on NWH.UN’s closing unit price of $11.55/unit as of August 6, 2019. 2. Based on the REIT’s distribution policy of $0.80/unit per annum and normalized Q2-19 AFFO of $0.92/unit. 3. Based on total assets of NWH, Vital Trust on a fully consolidated basis including post-quarter acquisition
Slide 53: 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 52
Slide 54: Investor Notes
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Slide 55: Investor Notes
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NorthWest Healthcare Properties Real Estate Investment Trust — Q2 2019 Earnings Presentation on 6ix