Vital Infrastructure Property Trust · TSX:VITL.UN
Vital Infrastructure Property Trust — Northwest Healthcare Properties Real Estate Investment Trust — Q1 2020 Earnings Presentation
57 slides from Vital Infrastructure Property Trust's earnings presentation, May 14, 2020
Slide 1: Q1 2020 Investor Update
Q1 2020 INVESTOR UPDATE May 14, 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 AUCKLAND ✓ Defensive operating fundamentals S Ã O PA U L O Cure healthcare focus underpinned by government funding ✓ Scalable platform with emb
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 Outpatient Life Sciences Skilled Assisted Independent Rehab MOB Nursing/Aged
Slide 5: Defensive Underlying Portfolio
DEFENSIVE UNDERLYING PORTFOLIO Operating Metrics Diversification 97% 14 yr 7 >1,900 Portfolio Occupancy WALE Countries Tenants 74% Inflation Indexed Acute & Primary Rents Stable Healthcare Focus Operating Fundamentals > 80% Tenants with Australia’s Leading Government Support Hospital Operator >$350B
Slide 6: 2020 Strategic Priorities: Adjusting for COVID-19
2020 STRATEGIC PRIORITIES: ADJUSTING FOR COVID-19 SHORT TERM SHIFT IN 2020 OBJECTIVES REMAIN UNCHANGED OPERATIONAL OBJECTIVES GROWTH OF ASSET EUROPEAN AUSTRALASIAN PORTFOLIO COVID-19: IMPACT MANAGEMENT PLATFORM EXPANSION MANAGEMENT • $2.9B (€2.0B) JV to invest in • European platform exceeds • Comple
Slide 7: Northwest's Response to COVID-19
NORTHWEST’S RESPONSE TO COVID-19 HEALTH AND SAFETY BUSINESS CONTINUITY FINANCIAL FLEXIBILITY • The safety of our tenants, • Global business continuity plan has NWH has prioritized financial flexibility employees, and the broader allowed NWH to efficiently operate and liquidity: community is NWH’s to
Slide 8: COVID-19: Operational KPIs
COVID-19: OPERATIONAL KPIs Rent collection Business Impact 84% 100% May Rent Properties Open Collections 97% >80% Rent Collection Tenants Government Funded Top 10 Tenants COVID-19: STONG KPIs • Reduced traffic impacting parking income • Enhanced government funding to and smaller service-oriented ten
Slide 9: Operational Impact: Hospitals & MOBs
OPERATIONAL IMPACT : HOSPITALS & MOBs OVERALL DEMAND FOR HEALTHCARE SERVICES HOSPITALS MOBs CHANGING IN THE SHORT TERM WITH PUBLIC • No government intervention • > 1,000 healthcare focused tenants Americas anticipated Americas • 83% directly or indirectly HEALTHCARE SYSTEMS • Elective surgeries post
Slide 10: Strategic Relationships and Tenant Diversification
STRATEGIC RELATIONSHIPS AND TENANT DIVERSIFCATION COVID-19 IMPACT: LARGEST TENANTS TENANT REGION % GROSS RENT OPERATIONAL COMMENTARY 1 Rede D’Or 12.4% Fully operational; limiting elective surgery to increase ICU capacity 2 Healthscope Limited 5.0% Negotiating agreements with state governments 3 Heal
Slide 11: Global Healthcare Trends
GLOBAL HEALTHCARE TRENDS Ss NORTHWEST
Slide 12: Global Healthcare Market
GLOBAL HEALTHCARE MARKET Trillion Annual Global Healthcare Spend ($US) 10.4% Global Healthcare Expenditure (% GDP) 4-7% Annual Growth $ WA NORTHWEST
Slide 13: 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 $332B 3. Higher quality / v
Slide 14: 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 15: Regional Impact of COVID-19
REGIONAL IMPACT OF COVID 19 G20 + NWH REGIONS: COVID-19 CASES/MILLION PEOPLE* 5,000 4,500 4,362 4,000 3,690 3,434 3,500 3,000 2,740 2,538 2,500 2,084 1,943 2,000 1,728 1,716 1,500 1,346 924 1,000 385 312 310 274 500 215 214 152 127 59 59 58 - AMERICAS EUROPE AUSTRALASIA • Canada’s economy is reopeni
Slide 16: NWH Platform
NWH PLATFORM ) 1] | ins ih
Slide 17: 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 18: Differentiated Strategy
DIFFERENTIATED STRATEGY SCALED $6.6B+ $8.0B $4.1B Platform Fee Bearing Capital Un-deployed Capital 29% CAGR from 2015-2019 JV Partnerships and Vital Trust Investment To be deployed in EUR and AUS CASH FLOW STABILITY EMBEDDED GROWTH 97%+ 14.4 Year 74%+ $303M Occupancy WALE Indexed Development Pipelin
Slide 19: Business Model
BUSINESS MODEL • WALE: 14.4 Years / Occupancy: 97.3% SPNOI (Levered) +5.8% • Inflation Indexed Leases: 74% Asset • Fee Bearing Capital: $8.0B Management • Target Capital Commitments: $11.5B +3.3% Development Accretion • Committed Developments: $303M +0.3% • Development Yield: 100bps spread +9% Annua
Slide 20: Financial Highlights
FINANCIAL HIGHLIGHTS 19
Slide 21: Financial Dashboard
FINANCIAL DASHBOARD As Reported Normalized AFFO/unit (5) $0.82/unit $0.92/unit LTV (6) 44.6% / 49.5% ~43% NAV (7) $12.53/unit ~$12.50/unit Occupancy / 97.3% 97.3% WALE 14.4 years 14.4 years Portfolio Quality 20
Slide 22: Proportionate Income Statement
PROPORTIONATE INCOME STATEMENT 4.0% AFFO PER UNIT GROWTH DRIVEN BY For the Quarter ended March 31 2.9% SPNOI growth & C$M 2019 2020 % change ACCRETIVE ACQUISITIONS, accretive investment activity Net Operating Income 52.0 60.5 16.5% SPNOI GROWTH AND Management Fee Income 13.2 8.5 -35.8% Interest Inco
Slide 23: Earnings Growth
EARNINGS GROWTH ANNUAL AFFO/UNIT BRIDGE $0.04 ($0.11) $0.14 ($0.05) $0.80 $0.82 Q1-2019 Annualized Acquisitions SPNOI Deleveraging FX Q1-2020 Annualized Accretive SPNOI Fee Bearing Equity FX Global Growth AUM Growth Issuance Depreciation Acquisitions 22
Slide 24: Proportionate Balance Sheet
PROPORTIONATE BALANCE SHEET 8% NAV PER UNIT GROWTH As at March 31 DRIVEN BY REDUCED C$M 2019 2020 % change +$647M LEVERAGE, IMPROVED Investment Properties 3,439.8 4,086.7 18.8% Proportionate acquisitions Global Manager 269.2 525.0 95.0% PROPERTY VALUATIONS Other Assets 686.9 430.5 -37.3% Total Asset
Slide 25: NAV Growth
NAV GROWTH SIGNIFICANT VALUE CREATION ANNUAL NAV/UNIT BRIDGE 22% CAGR $0.10 ($0.75) $0.82 ($0.55) $1.26 2,256 2,229 1,492 $12.53 1,433 1,031 $11.65 768 2015 2016 2017 2018 2019 Q1-20 Q1-19 Global IPP Fair Value of FX Other Q1-20 NAV/Unit Manager Adj revaluation Convertible NAV/Unit Debentures Value
Slide 26: Liquidity and Balance Sheet Update
LIQUIDITY AND BALANCE SHEET UPDATE WITH FORECAST LIQUIDITY LIQUIDITY FORECAST OF ~$364M, NWH IS WELL POSITIONED TO EXECUTE $M $80M ON ITS STRATEGIC Q1 2020 137 $64M PRIORITIES DURING THIS $82M RCF upsize (complete) 82 UNCERTAIN TIME $364M Current liquidity 220 $220M THE REIT HAS REPAID OR $137M AUS
Slide 27: Significant Value Creation in Global Asset Manager
SIGNIFICANT VALUE CREATION IN GLOBAL ASSET MANAGER Available AUM NWH Stabilized Status Capacity Term ~$8.0B OF GLOBAL ($B) ($B) Ownership Fees ($M) CAPITAL COMMITMENTS Active Australian Core Active $3.4 $1.5 30% Perpetuity $20 DRIVING SIGNIFICANT Hospital JV VALUE CREATION IN THE Vital Active $1.7 O
Slide 28: Strategic Transactions: European Joint Venture
STRATEGIC TRANSACTIONS: EUROPEAN JOINT VENTURE EUROPEAN JOINT VENTURE € 0.2 B Lower NWH equity requirement €200M (30%) NWH equity Ability to deployed scale Reduced cost over 5 years European of capital platform € 1.8 B Increased Target 65% LTV management fees and promoted Deployed returns Capacity S
Slide 29: Australasian Portfolio Management: Simplification
AUSTRALASIAN PORTFOLIO MANAGEMENT: SIMPLIFICATION DIVESTING WHOLLY OWNED AUSTRALASIAN ASSETS SIMPLIFIES PLATFORM WHOLLY OWNED NWH CAPITAL PLATFORMS AUS JV Vital Q4 2019 +5 assets +3 assets 12 assets $367M sales to capital +$209M +$52M $425M platforms and 3rd Parties Status: Closing Status: Closed Q2
Slide 30: Deleveraging
DELEVERAGING Historical LTV Trend Proportionate Net Debt/EBITDA Bridge (0.85x) 60.0% (0.52x) 57.1% -600 bps YOY 55.6% 54.5% 55.0% 53.1% 49.9% 49.5% 50.0% 9.37x 8.00x 45.0% 40.0% 35.0% Q1-20 Net AUS JV Sale Europe JV Sale Target Net Debt/EBITDA Debt/EBITDA -600 bps $644M $230M +144M LTV YOY LTM Equit
Slide 31: 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 RISK LTM Currency Impact (7.0%) ($0.05) ($1.01) AFFO/Unit NAV/Unit
Slide 32: Investment Activity
INVESTMENT ACTIVITY 31
Slide 33: Consolidated Investment Activity
CONSOLIDATED INVESTMENT ACTIVITY Q1 TRANSACTIONS EUROPEAN PORTFOLIO GROWTH TRANSACTION TYPE REGION C$M 1,200 79.9% 1,077 German Hospital Acquisition GER 27 1,000 773 800 599 German Clinic Acquisition GER 31 600 400 Australian Life Acquisition AUS 96 200 Sciences - UK Hospital Portfolio Acquisition U
Slide 34: UK Expansion
UK EXPANSION Strategic Fit Defensive Portfolio Characteristics • Strategic fit: High quality health care infrastructure assets with triple net leases, 100% occupancy, long-WALE and annual rent indexation 100% 13 year Occupancy WALE • Geographic fit: Natural extension of European platform to a market
Slide 35: Accretive Development & Expansion Pipeline
ACCRETIVE DEVELOPMENT & EXPANSION PIPELINE • ~$303M (fully consolidated; $126.7M proportionate) of committed low risk development & WITH A TRACK RECORD expansions in Australasia, Brazil and Canada to be funded through a combination of existing OF COMPLETING MORE resources and property financing THAN
Slide 36: Portfolio Overview
PORTFOLIO OVERVIEW 35
Slide 37: Global Portfolio
GLOBAL PORTFOLIO $1.2B 0.9% $1.1B 2.6% GROSS ASSETS SP NOI GROSS ASSETS SP NOI 92.1% 5.2 $6.6B 97.8% 15.5 OCCUPANCY YEAR WALE TOTAL ASSETS OCCUPANCY YEAR WALE 14.4 97.3% $0.7B 4.6% WALE Occupancy $3.7B 3.4% GROSS ASSETS SP NOI 183 2.9% GROSS ASSETS SP NOI Total Properties 100% 19.0 SPNOI(8) 99.4% 18
Slide 38: Asset Mix by Region and Segment
ASSET MIX BY REGION AND SEGMENT ON A PROPORTIONATE Proportionate NOI Diversification BASIS HOSPITALS Q1 2020 Q1 2020 ACCOUNT FOR 51% OF NET Australasia Canada Hospital and MOB OPERATING INCOME 24% Healthcare 30% Facilities Q1 2019 26% Q1 2019 INCREASING FOCUS ON 39% REGIONS ASSET MIX 47% 49% HEALTHC
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) $1.9 B deployed between into seed assets, HSO, and $1.8B $1.8B (initial $1.5 B Recent acquisitions (committed commitment) expansion) $1.9 B $5.2B JV Target 65% LTV including available Deployed capacity a
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 SIGNIFICANT DISCOUNT TO ITS PEERS ON AN AFFO MULTIPLE BASIS - Based on NWH.UN’s closing unit price of $9.06/unit as of May 14 2020, and normalized AFFO/Unit of $0.92 per year; NWH.UN’s NAV/unit is based on Q1 2020 of $12.53. 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 (May 14, 2020) $9.06 Market Capitalization ~$1.6B Distribution Yield 8.8% 52-Week Trading Range $6.27-$13.35 Volume Weighted Avg. Price (VWAP) (20-da
Slide 46: Regional Portfolio Overviews
APPENDIX 1 REGIONAL PORTFOLIO OVERVIEWS 45
Slide 47: Portfolio Profile
PORTFOLIO PROFILE PORTFOLIO COMPRISES GLOBAL HEALTHCARE REAL ESTATE INFRASTRUCTURE 183 PROPERTIES TOTALING 15.2M Q1 2020 Canada Brazil Europe Vital Trust NWAUS Platform* SQUARE FEET OF GLA IN SIX COUNTRIES Number of 57 8 47 48 23 183 STRONG OPERATING Properties FUNDAMENTALS WITH 64% MOB & 24% MOB &
Slide 48: 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 57 properties comprising GLA of 3.6 million sf and 1,060 NT tenants NU ◼ 92.1% occupancy and ~5.2 year WALE ⚫ High qualit
Slide 49: 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 ◼ 100.0% occupancy and 19.0 year WALE RORAIMA AMAPÁ ⚫ Stable cash flow with long-term, t
Slide 50: Europe: Strategically Located MOB Assets
EUROPE: STRATEGICALLY LOCATED MOB ASSETS Netherlands INVESTMENT AND MARKET OVERVIEW Germany SCHLESWIG- ⚫ High quality MOB assets located in the major markets including Berlin, HOLSTEIN Hamburg, Frankfurt, Ingolstadt, Leipzig and Rotterdam 5 Wilhelmshaven 1 MECKLENBURG-WESTERN POMERANIA ◼ 97.8% occup
Slide 51: 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 ~$1.8B in existing assets ⚫ Portfolio of 23 Properties of ~2.9M Square Feet ◼ 17 hospitals and 6 med
Slide 52: Australasia (2): Strategic Investment in Vital Trust
AUSTRALASIA (2): STRATEGIC INVESTMENT IN VITAL TRUST INVESTMENT AND MARKET OVERVIEW AUSTRALIA ⚫ Manager and 24.9% strategic shareholder of Vital Trust (NZX:VHP), Australasia’s largest listed healthcare real estate owner with 26 private hospitals, 10 MOBs, 8 aged care assets and 4 development lots ◼
Slide 53: Management Biographies
APPENDIX 2 MANAGEMENT BIOGRAPHIES 52
Slide 54: Global Platform with Regional Capability and Expertise
GLOBAL PLATFORM WITH REGIONAL CAPABILITY AND EXPERTISE CORPORATE MANAGEMENT REGIONAL OPERATING PLATFORM FULLY ESTABLISHED, SCALABLE REGIONAL TEAMS ⚫ Founder of NWH & NWI WITH EXPERTISE IN Paul Dalla Peter Riggin ⚫ Leads NWH’s real REITs HEALTHCARE PROPERTY Lana COO & MD estate operations and ⚫ Large
Slide 55: Notes
NOTES 1. Based on NWH.UN’s closing unit price of $9.06/unit as of May 14, 2020. 2. Based on the REIT’s distribution policy of $0.80/unit per annum and normalized Q1 2020 AFFO of $0.92/unit. 3. Based on total assets of NWH, Vital Trust on a fully consolidated basis including post-quarter acquisitions
Slide 56: 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 55
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Northwest Healthcare Properties Real Estate Investment Trust — Q1 2020 Earnings Presentation on 6ix