Vital Infrastructure Property Trust · TSX:VITL.UN
Vital Infrastructure Property Trust — Northwest Healthcare Properties REIT — Q4 2021 Earnings Presentation
40 slides from Vital Infrastructure Property Trust's earnings presentation, Mar 14, 2022
Slide 1: Q4 2021 Investor Update
Q4 2021 INVESTOR UPDATE March 14, 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 ✓ A proven track record Annual total shareholder return of 16.5% MELB
Slide 4: Why Invest in Healthcare Real Estate
WHY INVEST IN HEALTHCARE REAL ESTATE $3 Trillion ‘niche’ market Excellent demand side Defensive with growing demand fundamentals characteristics; indexation delivering growth • $8 Tn spent annually on global • Supportive demographic trends • Healthcare real estate has been healthcare with growing &
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: 2021 Financial Highlights
2021 FINANCIAL HIGHLIGHTS +2% +9% $0.87 $14.47 850 bps 3.6% 2021 AFFO/Unit 2021 NAV/Unit LTV Reduction SPNOI AFFO GROWTH* LEVERAGE & VALUE CREATION $0.07 $0.02 $0.01 57.0% 52.1% 49.6% 49.8% 48.5% 48.0% $0.95 * 44.3% 43.1% 43.8% $0.85 41.9% Q4-20 Q1 21 Q2 21 Q3 21 Q4 21 2020 AFFO/Unit Investment & SP
Slide 7: 2021 Investment Highlights
2021 INVESTMENT HIGHLIGHTS 2021 AGGREGATE INVESTMENT METRICS TRANSACTION VOLUME OF ~$1.0B ~$1.0B +~1M sq ft +1.2M sq ft +9 Investment Gross Leasable Precinct $200M OF UK VALUE Net Properties Activity Area Development CREATION INITIATIVES POSITIONED THE PORTFOLIO FOR JV UK INITIATIVES RESULT IN VALUE
Slide 8: 2022 Strategic Priorities
2022 STRATEGIC PRIORITIES CORE DEFENSIVE ACCELERATING GROWTH RAPIDLY GROWING ASSET PORTFOLIO PROFILE MANGEMENT PLATFORM • NWH’s portfolio is highly • US market entry to • Proportionate AM fees defensive: accelerate growth: +60% 2021 YTD ✓ Long-WALE > ~15 ✓ Largest healthcare RE years market globally
Slide 9: UK JV Positioned for Q2 2022 Execution
UK JV POSITIONED FOR Q2 2022 EXECUTION KEY METRICS & HISTORY TIMELINE • 2020: 10 hospital portfolio acquired for ~$620M 27% YOY AUM GROWTH SINCE 2020 at a weighted average cap rate of ~6% $1B+ $980M • 2021: Aspen acquisition and restructuring initiatives generated $150M+ of fair value uplift. Cheshi
Slide 10: New $2.2B Australian JV Expansion
NEW $2.2B AUSTRALIAN JV EXPANSION KEY JV METRICS A$2.4B ~A$11M ~$100M Upsize Stabilized Fees Value Creation ADDITIONAL JV CAPACITY SUPPORTS +$2.0 BILLION PIEPLINE ⚫ Northwest has received investor approval for $5.6B ANZ Commitment an expanded Australian institutional JV ⚫ With the original JV now fu
Slide 11: US Market Entry: $765M Portfolio Acquisition
US MARKET ENTRY: $765M PORTFOLIO ACQUISITION LANDMARK $765M KEY FINANCIAL METRICS (US$602M) US ACQUISITION OF 27 $765M 5.5% 55% Acquisition Price Portfolio cap rate LTV PROPERTIES ACROSS 10 STATES ~90% ~$345M Indexation NWH Equity Requirement ATTRACTIVE PORTFOLIO WELL POSITIONED FOR COINVESTMENT OPP
Slide 12: US Portfolio Overview
US PORTFOLIO OVERVIEW ASSET CLASS & GEOGRAPHIC DIVERSIFICATION (BY NOI) US State # of Assets % of NOI Arizona 9 20% Illinois 5 19% Texas 5 13% 38% Florida 2 11% California 1 11% Minnesota 1 8% 62% Oklahoma 1 7% Massachusetts 1 4% Colorado 1 4% Indiana 1 3% Core Healthcare MOB Total 27 100% DIVERSIFE
Slide 13: 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 14: Financial Highlights
FINANCIAL HIGHLIGHTS 13
Slide 15: Financial Dashboard
FINANCIAL DASHBOARD 2020 Reported 2021 Reported 2021 Adjusted AFFO/unit (5) $0.85/unit $0.87/unit $0.95/unit * LTV (6)/ 48.0% / 57.0% 41.9% / 48.5% 48.0% / 57.0% Proportionate LTV NAV (7) $13.27/unit $14.47/unit $15.47/unit ** Accretive JV Debt Developments Deployment Repayment 14 *Assumes constant
Slide 16: Delivering on NAV Growth with More to Come
DELIVERING ON NAV GROWTH WITH MORE TO COME 17% YOY NAV/UNIT GROWTH ON A CONSTANT CURRENCY BASIS PRIMARILY DRIVEN BY FAIR VALUE GAINS $0.44 ($1.00) ~9% YoY $1.79 (17% YoY constant currency) ($0.03) $14.47 $13.27 Q4-20 NAV/Unit IPP revaluation Global Manager FX Other Q4-21 NAV/Unit NAV growth driven b
Slide 17: Evolution of Asset Management Platform
EVOLUTION OF ASSET MANAGEMENT PLATFORM TOTAL AUM HAS HISTORICAL CHART OF AUM AND OWNERSHIP INCREASED FROM ~$4B $10B $9.2B 100% $9B 90% TO $9.2B WHILE LOOK- $8B $6.5B $7.8B 80% 70% THROUGH OWNERSHIP $7B 61% $4.B 70% $6B $3.4B 60% HAS DECREASED TO $5B $4.1B $2.5B 56% 57% 50% $4B 40% 57% $3B $1.2B 30%
Slide 18: Significant Value Creation in Global Asset Manager
SIGNIFICANT VALUE CREATION IN GLOBAL ASSET MANAGER Deployed & Available NWH $B Status AUM Term ~$11B OF ACTIVE Active Committed Capacity Ownership Australian Core GLOBAL CAPITAL Hospital JV Active $3.4 $3.3 $0.1 30% Perpetuity COMMITMENTS Vital Active $2.6 $2.6 Open 27% Perpetuity DRIVING SIGNIFICAN
Slide 19: Investment Credit Grade Metrics Achieved
INVESTMENT CREDIT GRADE METRICS ACHIEVED PF LTV Proportionate Net Debt/EBITDA Bridge 1.63x (2.61x) Forecast 57.0% -850 bps 55.8% 52.1% YoY 49.6% 49.8% 48.5% 44.7% 48.0% 48.3% 9.54x 44.3% 43.8% 8.56x 43.1% 41.9% 35.6% Q4-20 Q1 21 Q2 21 Q3 21 Q4 21 US UK JV & Expansion US JV Q4-21 US Expansion & UK JV
Slide 20: Proportionate Income Statement
PROPORTIONATE INCOME STATEMENT DEFENSIVE OPERATING Constant Currency & Leverage Neutral AFFO per Unit of $0.95 PERFORMANCE AND ACCRETIVE INVESTMENT ACTIVITY COMBINED Increase driven by SPNOI growth and investment activity WITH MANAGEMENT FEE GROWTH DRIVES RECORD 2021 Reduced interest expense FINANCI
Slide 21: Proportionate Balance Sheet
PROPORTIONATE BALANCE SHEET DEFENSIVE OPERATING Constant Currency NAV per Unit of $15.47 PERFORMANCE AND ACCRETIVE INVESTMENT ACTIVITY COMBINED Including ~$330M Fair WITH MANAGEMENT FEE Value Gain GROWTH DRIVES ~$580M RECORD 2021 2021 Equity Issuance (incl Series E & F Converts) FINANCIAL RESULTS ~9
Slide 22: Risk Management – Foreign Exchange
RISK MANAGEMENT – FOREIGN EXCHANGE OVER A 15 YEAR PERIOD, THE REIT’S NOI WEIGHTED FOREIGN EXCHANGE INDEX HAS REMAINED RELATIVELY STABLE RENTAL INDEXATION ACTS AS NATURAL CURRENCY HEDGE PORTFOLIO SECURED WITH LOCAL CURRENCY DEBT WHEREVER POSSIBLE TO MINIMIZE FX RISK • Canada: FX • Europe: FX volatili
Slide 23: Global Healthcare Trends
GLOBAL HEALTHCARE TRENDS Ss NORTHWEST
Slide 24: Healthcare Trends Impact on Healthcare Real Estate
HEALTHCARE TRENDS IMPACT ON HEALTHCARE REAL ESTATE HEALTHCARE TRENDS are driving real estate opportunities. Outpatient / Increased Aging Operator Increasing Urbanization funding population home care consolidation asset size needs Limited Positive Positive Positive Positive Positive Hospitals impact
Slide 25: Investment Activity
INVESTMENT ACTIVITY 24
Slide 26: Consolidated Investment Activity
CONSOLIDATED INVESTMENT ACTIVITY 2021 TRANSACTIONS HIGHLIGHTED TYPE REGION C$M TRANSACTIONS Netherlands MOB Acquisition NL 176 CHESHIRE HOSPITAL UNITED KINGDOM Australian Unity M&A AUS 127 Acquisition Cheshire Hospital Acquisition UK 153 Epworth Geelong & Acquisition AUS 117 ELIM Hospital AUSTRALIA
Slide 27: Committed Developments
COMMITTED DEVELOPMENTS • ~$340.7M (fully consolidated; $131.5M proportionate) of committed low risk development & THE REIT IS expansions in Australasia, Europe, Brazil and Canada to be funded through a combination of existing resources and property financing LEVERAGING ITS ▪ $267.5M ($71.0M proporti
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 BASIS HOSPITALS Q4 2021 Q4 2021 Life ACCOUNT FOR 58% OF Australasia Canada Hospital and Sciences 25% 26% 2% Healthcare NET OPERATING 24% Q4 2020 28% Facilities Q4 2020 2% 58% 54% INCOME REGIONS ASSET MIX INCREASING
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 14.6% 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: Relative Valuation
RELATIVE VALUATION THE REIT IS TRADING AFFO Multiple AT A DISCOUNT TO 20.0x ITS PEERS ON AN $16.61 $16.61 15.0x AFFO MULTIPLE BASIS 10.0x $15.32 17.5x 16.1x 17.5x 14.7x 5.0x $13.92 0.0x NWH.UN Canadian REITS Internationally Focused US Healthcare REITS (EV > $1BN) Canadian REITS $16.95 15.0% $13.92 $
Slide 36: 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 (March 14, 2021) $13.92 Market Capitalization ~$3.1B Distribution Yield 5.7% 52-Week Trading Range $12.60-$14.04 Volume Weighted Av
Slide 37: Notes
NOTES 1. Based on NWH.UN’s closing unit price of $13.92/unit as of March 14, 2021. 2. Based on the REIT’s distribution policy of $0.80/unit per annum and 2021 AFFO of $0.95/unit based on a constant currency and leverage basis 3. Based on total assets under management of NWH pro-formal completion of
Slide 38: 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 39: 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 38
Slide 40: Slide 40
Northwest Healthcare Properties REIT — Q4 2021 Earnings Presentation on 6ix