Vital Infrastructure Property Trust · TSX:VITL.UN
Vital Infrastructure Property Trust — Northwest Healthcare Properties Real Estate Investment Trust — Q2 2022 Earnings Presentation
39 slides from Vital Infrastructure Property Trust's earnings presentation, Aug 11, 2022
Slide 1: Q2 2022 Investor Update
Q2 2022 INVESTOR UPDATE August 11, 2022
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 PHOENIX ✓ A proven track record 3 year total shareholder return of 24
Slide 4: Why Invest in Healthcare Real Estate
WHY INVEST IN HEALTHCARE REAL ESTATE $3 Trillion ‘niche’ Excellent demand Defensive healthcare real estate fundamentals characteristics; market with growing indexation delivering demand growth • $8 Tn spent annually on global • Supportive demographic trends • Healthcare real estate has been healthca
Slide 5: Northwest's Focus
NORTHWEST’S FOCUS CURE CARE Higher Acuity Lower Acuity NWH FOCUS Hospital Ambulatory Care & MOB Life Sciences Skilled Assisted Living Independent Outpatient Nursing/Aged Living Care Healthcare precincts drive long- Evolution term value creations through; ➢ Higher value tenants & retention ➢ Higher r
Slide 6: Highlights of the Quarter
HIGHLIGHTS OF THE QUARTER -9% +8% $0.20 YoY $14.19 YoY 460 bps YoY 3.6% YoY AFFO/Unit NAV/Unit LTV Increase SPNOI US MARKET ENTRY & AFFO GROWTH LEVERAGE & VALUE CREATION $776M 5.5% Acquisition Price Portfolio cap rate 54.2% 49.6% 49.8% 48.8% 48.5% 92% 55% 46.4% LTV 43.1% 43.8% Indexation 41.9% 42.5%
Slide 7: Strategic Priorities Update
STRATEGIC PRIORITIES UPDATE CORE DEFENSIVE ACCELERATING GROWTH RAPIDLY GROWING ASSET PORTFOLIO PROFILE MANGEMENT PLATFORM • NWH’s portfolio is highly defensive: • US market entry to accelerate growth: ✓ • Total management fees +35% YoY ✓ Long-WALE of ~14 ✓ Largest healthcare RE years market globally
Slide 8: Defensive Underlying Portfolio
DEFENSIVE UNDERLYING PORTFOLIO Operating Metrics Diversification ~97% 8 >2,100 Portfolio Occupancy Countries Tenants Diverse tenants encompass 82% 14 yr hospitals operators, Inflation Indexed rehabilitation clinics, life WALE sciences and individual Rents STABLE practitioners OPERATING FUNDAMENTALS
Slide 9: High Indexation
HIGH INDEXATION THE REIT’S ⚫ Due to the long duration of most of Northwest’s leases; rents generally escalate each year INTERNATIONAL ⚫ Within international markets ~98% of leases are indexed minimizing the impact of the current inflationary environment PORTFOLIO IS ⚫ The international portfolio is
Slide 10: UK JV Positioned for Completion
UK JV POSITIONED FOR COMPLETION KEY METRICS & HISTORY TIMELINE • 2020: 10 hospital portfolio acquired for 27% YOY AUM GROWTH SINCE 2020 ~$620M at a weighted average cap rate $1B+ of ~6% $980M • 2021: Aspen acquisition and restructuring $620M initiatives generated $150M+ of fair value uplift. Cheshir
Slide 11: Planned US JV
PLANNED US JV ILLUSTRATIVE METRICS $776M 26 1.2M 5.5% Fully Portfolio Assets Sq. Ft. GLA WACR Stabilized OPPORTUNITY HIGH QUALITY PORTFOLIO ⚫ Opportunity to expand global asset management platform to a dynamic US market generating significant fees and value creation ⚫ Targeting partnership with inst
Slide 12: Global JV Formation Drives NAV Growth
GLOBAL JV FORMATION DRIVES NAV GROWTH Pre-2020 2020-2022 2022+ Region Capital Partner(s) TBD Target AUM($B) +$6.2B ~$5.0B ~$3.5B Valuation* $400M $225M $125M $625M $750M UK + US JV Current Valuation Target Valuation 11 * Based on implied 13x Year 1 Manager EBITDA mutliple
Slide 13: Balance Sheet Optimization
BALANCE SHEET OPTIMIZATION Pro-forma LTV +460 bps Forecast 54.2% YoY 49.6% 49.8% 48.5% 48.8% 44.7% 46.4% 42.1% 43.8% 43.1% 42.5% 41.9% 37.6% 35.3% Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 UK & US JV Series G Conversion* Consolidated Proportionate PROFORMA BALANCE SHEET METRICS ~30% ~7.0x 3.3% 3.6 Yrs Floating
Slide 14: Global Healthcare Precinct Strategy
GLOBAL HEALTHCARE PRECINCT STRATEGY 1 Intersection of NORTHWEST IS healthcare, HEALTHCARE AT THE CORE INVESTING IN THE CORE education, and life science OF HEALTHCARE, RESEARCH AND 2 KNOWLEDGE Growing PROJECT PIPELINE EXPANDING PRECINCTS Opportunity WITH POTENTIAL VALUE OF $2.5B 3 Differentiated ATTR
Slide 15: Financial Highlights
FINANCIAL HIGHLIGHTS 14
Slide 16: Financial Dashboard
FINANCIAL DASHBOARD Q2-21 Annualized Q2-22 Annualized AFFO/unit (5) $0.86/unit $0.80/unit LTV (6)/ 43.1% / 49.6% 46.4% / 54.2% Proportionate LTV NAV (7) $13.14/unit $14.19/unit Accretive JV Debt Developments Deployment Repayment 15
Slide 17: Delivering NAV Growth
DELIVERING NAV GROWTH 8% YOY NAV/UNIT GROWTH $0.44 ($0.85) $1.52 ($0.06) $14.19 $13.14 Q2-21 NAV/Unit IPP revaluation Global Manager FX Other Q2-22 NAV/Unit NAV GROWTH DRIVEN BY $480M OF FAIR VALUE GAINS & ~$100M VALUATION UPLIFT FROM AUS JV EXPANSION Global Asset Institutionalization Development UK
Slide 18: Evolution of Asset Management Platform
EVOLUTION OF ASSET MANAGEMENT PLATFORM SUCCESSFUL HISTORICAL CHART OF AUM AND OWNERSHIP EXECUTION OF UK & US $12B $10.2B $10.2B 100% 90% JV WILL RESULT IN $10B 70% $9.2B 80% $6.5B $7.8B $5.3B 70% LOOK-THROUGH $8B 56% 57% 60% 61% 48% 60% OWNERSHIP $6B $3.4B $4.B $4.1B 50% $4.1B 40% DECREASING TO ~48%
Slide 19: Significant Value Creation in Global Asset Manager
SIGNIFICANT VALUE CREATION IN GLOBAL ASSET MANAGER Total Deployed & Available NWH $B Status Term ~$11B OF ACTIVE Active Capacity Committed Capacity Ownership Australian Core GLOBAL CAPITAL Hospital JV Active $3.3 $3.1 $0.2 30% Perpetuity COMMITMENTS Australian JV Active $2.1 - $2.1 30% Perpetuity Ex
Slide 20: Proportionate Income Statement
PROPORTIONATE INCOME STATEMENT ~35% MANAGEMENT FEES GROWTH DRIVEN For the Quarter Ended June 30 C$M 2021 2022 % change BY INVESTMENT Net Operating Income 59.5 66.8 12.1% ~35% increase driven by INITIATIVES AND Management Fee Income 14.8 19.9 34.5% growth of fee bearing capital INCREASED FEE Interest
Slide 21: Proportionate Balance Sheet
PROPORTIONATE BALANCE SHEET ~8% NAV PER UNIT As at June 30 GROWTH DRIVEN BY C$M 2021 2022 % change UK and US portfolios Investment Properties 4,662.2 4,371.8 -6.2% IMPROVED PROPERTY Assets held for sale - 1,704.7 NM reclassified as assets held for sale in advance of JV VALUATIONS AND Other Assets 37
Slide 22: Risk Management – Foreign Exchange
RISK MANAGEMENT – FOREIGN EXCHANGE OVER A 16 YEAR PERIOD, THE REIT’S NOI WEIGHTED FOREIGN EXCHANGE INDEX HAS REMAINED RELATIVELY STABLE RENTAL INDEXATION ACTS AS NATURAL CURRENCY HEDGE PORTFOLIO SECURED WITH LOCAL CURRENCY DEBT WHEREVER POSSIBLE TO MINIMIZE FX RISK • Canada: FX • Europe: FX volatili
Slide 23: Global Healthcare Trends
GLOBAL HEALTHCARE TRENDS Ss NORTHWEST
Slide 24: Healthcare Trends Impact on Healthcare Real Estate
HEALTHCARE TRENDS IMPACT ON HEALTHCARE REAL ESTATE HEALTHCARE TRENDS are driving real estate opportunities. Outpatient / Increased Aging Operator Increasing Urbanization funding population home care consolidation asset size needs Limited Positive Positive Positive Positive Positive Hospitals impact
Slide 25: Investment Activity
INVESTMENT ACTIVITY 24
Slide 26: Consolidated Investment Activity
CONSOLIDATED INVESTMENT ACTIVITY 2022 YTD TRANSACTIONS TYPE REGION C$M US Portfolio Acquisition Acquisition US 776 Normal Course Acquisitions Acquisition Various 200 CHESHIRE HOSPITAL UNITED KINGDOM Total 976 2021 TRANSACTIONS HIGHLIGHTED TYPE REGION C$M TRANSACTIONS AUSTRALIA GERMANY Netherlands MO
Slide 27: Committed Developments
COMMITTED DEVELOPMENTS • ~$289.7M (Proportionate: $123.4M) of committed low risk development & expansions in THE REIT IS Australasia, Europe, Brazil and Canada to be funded through a combination of existing resources and property financing LEVERAGING ITS ▪ $229.4M ($63.5M proportionate) of Australas
Slide 28: Portfolio Overview
PORTFOLIO OVERVIEW 27
Slide 29: Asset Mix by Region and Segment
ASSET MIX BY REGION AND SEGMENT ON A PROPORTIONATE PROPORTIONATE NOI DIVERSIFICATION Q2 2022 Q2 2022 BASIS HOSPITALS Life ACCOUNT FOR 61% OF Australasia Hospital and Sciences 22% 2% Healthcare NET OPERATING 26% Facilities 2% Q2 2021 Q2 2021 INCOME 61% 45% 62% REGIONS Americas 51% ASSET MIX INCREASIN
Slide 30: 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 13.0% Albertans
Slide 31: Case Study – Epworth Eastern Hospital, Melbourne
CASE STUDY – 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 quality
Slide 32: Investment Opportunity
INVESTMENT OPPORTUNITY 31
Slide 33: 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 34: Environmental, Social and Governance
ENVIRONMENTAL, SOCIAL AND GOVERANCE NWH is committed to creating a more sustainable future through the implementation of a comprehensive ESG program underscored by four key pillars resulting in key 2022 commitments: Inclusive Company Thriving Partners Strong Communities Healthy Planet Building for o
Slide 35: Investor Factsheet
INVESTOR FACTSHEET Ticker NWH.UN Listed Exchange TSX Distribution Payable Monthly 40% Other Income/ Distribution Type 46% Return on Capital/ 14% Capital Gain Unit Price (August 11, 2022) $13.34 Market Capitalization ~$3.2B Distribution Yield 6.0% 52-Week Trading Range $11.85-$14.42 Volume Weighted A
Slide 36: Notes
NOTES 1. Based on NWH.UN’s closing unit price of $13.34/unit as of August 11, 2022. 2. Based on the REIT’s distribution policy of $0.80/unit per annum and Q2-2022 YTD annualized AFFO/Unit of $0.84 3. Based on total assets under management of NWH pro-formal completion of the US portfolio acquisition,
Slide 37: Non-IFRS Measures
NON-IFRS MEASURES Non-IFRS measures defined in Q4 2021 MD&A 1. FFO 2. AFFO 3. FFO per Unit 4. AFFO per Unit 5. AFFO Payout Ratio 6. EBITDA 7. Adjusted EBITDA 8. Investment Properties on a proportionate basis 9. Proportionate Management Fees 10. Interest Coverage 11. Cash Flows from Operation Activit
Slide 38: Contact Information
CONTACT INFORMATION NORTHWEST HEALTHCARE PROPERTIES REIT Paul Dalla Lana, Chairman & CEO pdl@nwhreit.com 416-366-2000 Ext. 1001 Shailen Chande, CFO shailen.chande@nwhreit.com 416-366-2000 Ext. 1002 37
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Northwest Healthcare Properties Real Estate Investment Trust — Q2 2022 Earnings Presentation on 6ix