Vital Healthcare Property Trust · NZX:VHP
Vital Healthcare Property Trust — FY2024 Earnings Presentation
56 slides from Vital Healthcare Property Trust's earnings presentation, Aug 8, 2024
Slide 1: FY24 Annual Results Presentation
FY24 Annual Results Presentation Continuing to enhance our resilience 8 AU G U ST 20 24
Slide 2: Contents
Contents Presenters Aaron Hockly SENIOR VICE PRESIDENT & FUND MANAGER Investing in healthcare property Michael Groth across Australia and New Zealand 3 CHIEF FINANCIAL OFFICER FY24 Highlights 6 Financial Results & Capital Management 10 Richard Roos CO-HEAD, ANZ REGION Property & Sector Update 16 Dev
Slide 3: Investing in healthcare property across Australia and New Zealand
Investing in healthcare property across Australia and New Zealand VITAL IS THE ONLY SPECIALIST HEALTHCARE LANDLORD LISTED ON THE NZX ST R AT EG Y B EI NG DEPLOYED Successful divestment of non-core assets at a 7.5% discount to prior book value Remaining committed developments are fully funded followi
Slide 4: Why healthcare real estate?
Why healthcare real estate? Vital focuses on the cure parts of the healthcare real estate spectrum; a defensive asset class that provides attractive risk adjusted returns, driven by an aging and growing population. Macarthur Health Precinct, NSW (Artist's impression) Growing demand Growing need Sust
Slide 5: Why invest in Vital?
Why invest in Vital? 1 Sector tailwinds underpinned by 2 Unmatched portfolio quality 3 Strong balance sheet 4 Embedded value in strategic land robust consumer for shovel ready demand developments <40% gearing; 77% Macarthur Health Precinct (Stage 1), NSW hedging; no significant debt expiring until Q
Slide 6: FY24 Highlights
FY24 Highlights Buranda Health Hub, QLD (Artist's impression)
Slide 7: FY24 Highlights
FY24 Highlights NON-CORE ASSET SALES AND DEVELOPMENTS HAVE HELPED IMPROVE THE RESILIENCE OF THE PORTFOLIO 18.3 NZ$251m 3.7% 1st year WALE versus 18.1 asset sales over FY24 increase in place for listed years in FY20 despite at a 7.5% discount to like-for-like net healthcare globally 5 years passing b
Slide 8: Strategic initiatives
Strategic initiatives Portfolio enhanced through recycling capital from asset sales into developments NZ$310m Non-core asset sales Capital partnering remains a OF ASS E T SALES SINC E medium term strategic objective. A sset sale process largely complete (including ~NZ$180m M A R CH 2023 INC LUDING i
Slide 9: Sustainability
Sustainability Two developments targeting 6 Star Green Star completed in FY24 GRESB SECTOR ARA SILVER A RATING LEADER 2023 AWARD UP FROM BBB IN 2022 Macarthur Health Precinct (Stage 1), Sydney Playford Health Hub (Stage 2), Adelaide T argeting 6 Star Green Star T argeting 6 Star Green Star (expected
Slide 10: Financial Results & Capital Management
Financial Results & Capital Management Avive Clinic, VIC
Slide 11: Financial performance
Financial performance INCR EAS E I N C AS H E A R NING S F R O M NPI O F FSE T BY NO N-C AS H / UNREALIS ED P RO P ERT Y REVALUATION S AC T UA L AC T UA L (%) F Y24 F Y 23 CHANGE Net property income 144,533 145,224 (0.5%) Like-for-like growth of 3.7% Corporate expenses (5,798) (4,659) 24.4% Reductio
Slide 12: Net property income
Net property income NO M ATE R I AL C H A N G E IN NE T PR O PE R T Y INC O ME D UE TO NO N-C O RE ASS E T SALES Over the last 5+ years: NET PROPERT Y INCOME BRIDGE ( N Z $M) 99.99% rent collection Negligible rent relief, bad or doubtful debts 160 5.0 (10.0) 155 5.9 150 (0.5) 145.2 (1.0) 144.5 FY24
Slide 13: Balance sheet
Balance sheet REM AINS WE LL P OS I T IO NE D 30 JUNE 30 JUNE (%) 2024 2023 CHANGE Decrease due to asset sales and property revaluations Investment properties 1 3,239,973 3,380,720 ( 4.2%) Other assets 64,786 48,992 32.2% Bank debt 1,292,653 1,245,293 3.8% Other liabilities 206,979 227,036 (8.8%) Ta
Slide 14: Prudent gearing maintained
Prudent gearing maintained SEEK I NG TO M AI N TAIN B A L A NC E SH E E T G E A R ING BELO W 40% BANK FACILITIES 30 JUNE 2024 30 JUNE 2023 Debt to gross assets (Trust Deed) 1 39.1% 36.3% Bank loan to value ratio – actual 40.4% 36.5% No significant debt 2 Bank loan to value ratio – covenant 55.0% 55.
Slide 15: Interest rate hedging profile
Interest rate hedging profile I N T E R E S T R AT E C O S T S S U B S TA N T I A L LY H E D G E D F O R ~2 Y E A R S T O H E L P M A N AG E R I S K RATE S 30 J U N 30 JUN H E D G I N G P RO F I L E ( A $M) 2024 2023 Weighted average cost of debt1 5.15% 4.93% 1,200 4.50% 4.00% 1,000 Weighted average
Slide 16: Property & Sector Update
Property & Sector Update Epworth Eastern Hospital, VIC
Slide 17: Australian private healthcare landscape
Australian private healthcare landscape W H I L E T H E R E A R E S O M E S H O R T T E R M H E A D W I N DS , P R I VAT E H E A LT H C A R E P L AYS A N E S S E N T I A L RO L E I N T H E D E L I V E RY O F H E A LT H C A R E I N AU S T R A L I A 45% of Australia’s population have private The press
Slide 18: New Zealand hospital landscape
New Zealand hospital landscape PRIVATE H OS P I TA LS A R E B E C O MING A N INC R E ASING LY IM P O RTANT ASS E T FO R H EALTH C ARE D ELIV ERY IN NEW Z E A L AN D FO R B OT H PU B L IC A ND PR IVATELY FUND ED PATIENTS The NZ Public Hospital System requires As a result of aged infrastructure, there
Slide 19: Portfolio continues to be strengthened
Portfolio continues to be strengthened C ONTINU I N G TO B UI L D A R E SIL IE NT PO R TF O L IO TH RO UG H TH E SALE O F NO N-C O RE ASS E TS Non-core asset sales NZ$59m + NZ$251m + NZ$180m = NZ$490m FY23 FY24 In due diligence Since March 2023 E nhanced focus on core metro and precinct locations C
Slide 20: Portfolio overview
Portfolio overview AUSTR A L AS I A' S H I GH E ST Q UA L IT Y INV E STA B L E HEALTH C ARE P O RTFO LIO 98% DI VERS IFI E D T E N AN T A ND INC O ME B ASE NZ$3.2B P O RTFO LIO D IV ERS IFIED % OF RE NT AC RO SS AUSTRALIA & NZ (BY VALUE) occupancy Aurora Healthcare 20% Healthe Care Surgical 16% Epwo
Slide 21: Lease expiry profile
Lease expiry profile LO W RISK E XP I RY P R O F IL E SU PPO R TS SU STA INA BLE, P RED IC TABLE AND D EFENS IV E C AS H FLO WS Vital's market leading WALE retained at 18.3 years up from 18.1 years in FY20 despite 5 years passing reflecting asset management initiatives, the strength of Vital's portf
Slide 22: Development Update
Development Update Playford Health Hub, SA
Slide 23: Development Update
Development Update C ompletion of $197m of developments in FY24 (materially on time and on budget) D evelopments comprise high quality facilities and are part of ongoing portfolio renewal, supporting operator partners and future earnings growth ~ NZ$500m of projects completed in the last 5 years enh
Slide 24: Macarthur Health Precinct (Stage 1), Sydney
C OMP LE T E D DE V E LOPME NTS Macarthur Health Precinct (Stage 1), Sydney A$57.4m integrated cancer centre completed in February 2024 Targeting 6 Star Green Star 100% leased to GenesisCare for 15 years plus (4x 10 year options) Located in Campbelltown in south west Sydney, one of Australia's faste
Slide 25: Avive Clinic, Mornington Peninsula
C OMP LE T E D DE V E LOPME NTS Avive Clinic, Mornington Peninsula Vital partnered with Avive to convert this former aged care facility into a modern 60-bed private mental health hospital Completed in December 2023 for a total project cost of $A28.5m 100% leased to Avive with initial lease term 25 y
Slide 26: Playford Health Hub (Stage 2), Adelaide
C OMP LE T E D DE V E LOPME NTS Playford Health Hub (Stage 2), Adelaide ~A$43.4m excl land development completed in May 2024, now 67% leased ~6,400sqm net lettable area specialist medical centre providing day oncology, radiotherapy, radiology, pathology and other related healthcare services through
Slide 27: Ormiston Hospital (Stage 1), Auckland
C OMP LE T E D DE V E LOPME NTS Ormiston Hospital (Stage 1), Auckland ~NZ$38.1m excl land expansion completed in June 2024, now 86% leased A ~3,600sqm net lettable area development, doubling the size of the existing facility Expansion of the existing Hospital to provide 3 endoscopy procedure rooms,
Slide 28: Wakefield Hospital, Wellington
V I TAL' S I N VE STM E N T C O MPL E T E (STAG E 2 A P P R OAC H ING PR AC TIC A L C O MPL E T IO N) Wakefield Hospital, Wellington Staged redevelopment of Wellington's largest private hospital Stage 1 completed in 2021 Stage 2 main works nearing completion Base isolators and building services move
Slide 29: Embedded value in potential developments
Embedded value in potential developments Cautious on committing to new developments Potential developments to be “shovel ready” pending supportive conditions ~NZ$200m Current holding value (mainly land) NZ$1.9b Pipeline is attractive Strategically focused Opportunity to to capital partners on precin
Slide 30: Future Focus
Tūngia te uruuru kia tupu whakaritorito Future Focus te tupu o te harakeke. Clear the undergrowth so that the new shoots of the flax will grow. Whakataukī Māori proverb Wakefield Hospital, Wellington
Slide 31: Outlook & guidance
Outlook & guidance C ONTINU E D DE LI V E RY A ND F O C U S O N A D D ING VALUE AND A RE TURN TO EARNING S G RO WTH Vital is a 'best in class' investment platform. FY25 focus Medium term Sustainability 9.75 cpu distribution Sector tailwinds Core of everything we do guidance Development upside from e
Slide 32: Appendices
Appendices Royston Hospital, New Zealand
Slide 33: Appendices: Board & Management
Appendices Board & Management Avive Clinic, VIC
Slide 34: Experienced Management Team
Experienced Management Team Aaron Hockly Chris Adams SENIOR VICE PRESIDENT - NEW ZEALAND & VITAL FUND MANAGER CO-HEAD, A/NZ REGION Aaron Hockly has over 20 years experience in financial services, property and law. Originally from New Chris Adams jointly leads the Northwest business in Australia and
Slide 35: Experienced Management Team
Experienced Management Team Vanessa Flax Michael Groth VICE PRESIDENT, REGIONAL GENERAL COUNSEL CHIEF FINANCIAL OFFICER AND COMPANY SECRETARY Michael Groth has over 18 years’ experience as a senior finance executive in the Vanessa Flax joined the team in 2019, prior to which she was a special counse
Slide 36: Majority Independent Board
Majority Independent Board Graham Stuart Mike Brady Angela Bull INDEPENDENT CHAIR AND MEMBER DIRECTOR INDEPENDENT DIRECTOR AND OF THE AUDIT COMMITTEE MEMBER OF THE AUDIT COMMITTEE Mike was appointed global President of Graham Stuart is an experienced corporate Northwest Healthcare Properties REIT (T
Slide 37: Majority Independent Board
Majority Independent Board Craig Mitchell Dr Michael Stanford AM DIRECTOR AND MEMBER OF THE INDEPENDENT DIRECTOR AND CHAIR AUDIT COMMITTEE OF THE AUDIT COMMITTEE Craig joined Northwest in 2018 as CEO Dr Michael Stanford has more than 30 years’ experience in the for Australia and New Zealand, was a h
Slide 38: Appendices: Additional financial information
Appendices Additional financial information Macarthur Health Precinct (Stage 1), NSW VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2024 | 38
Slide 39: Adjusted funds from operations (AFFO)
Adjusted funds from operations (AFFO) C ONS ER VAT I VE PAYO U T R ATIO R E TA INE D FY2024 FY2023 (%) CHA NG E Operating profit before tax and other income 73,924 69,494 6.4% Add/(deduct): Current tax expense (19,046) (14,787) 28.8% Incentive fee 6,600 14,986 (56.0%) Realised and unrealised fx on b
Slide 40: Net tangible assets (NTA)
Net tangible assets (NTA) NTA DECLINE PER UNIT PRIMARILY DUE TO UNREALISED PROPERT Y REVALUATION LOSSES NTA P ER UNIT BRIDG E (F Y24) $3.10 NZ$165m or 7.8% $3.00 reduction from June 2023 $2.96 ($0.23) $2.90 $2.80 $0.01 ($0.02) ($0.03) $2.70 $2.69 $2.60 $2.50 $2.40 FY23 Property Currency Retained New
Slide 41: Movement in investment property
Movement in investment property STRO NG C P I LI N KE D H E A LTH C A R E PO R T F O L IO O FFS E TS C AP RATE S O FTENING TOTA L P O RTFO LIO VA LU E BRI DGE (F Y24) (NZ$M) K EY F Y24 RESULTS Vital has been selling non-core $4,000 246 (165) assets to recycle capital into new $3,500 3,381 20 (254) 1
Slide 42: Comparative returns
Comparative returns V I TAL M AI N TAI N S LO NG-T E R M O U TPE R F O R MA N C E VS BENC H M ARK O N A TOTAL RE TURN 1 BAS IS TOTAL RETURN 1 TO 30 JUNE 2024 1YR 5YR (P.A.) 10YR (P.A.) SINCE 2004 (P.A.) 2 Long-term out-performance Vital (19.4%) (2.6%) 7.1% 9.2% highlights the defensive nature of hea
Slide 43: Appendices: Additional property information
Appendices Additional property information Avive Clinic, VIC VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2024 | 43
Slide 44: Investment properties
Investment properties AS AT 30 JUNE 2024 Click on one of the underlined properties to see a fly-through of that property ~NZ$3.2B P OR T FOLI O O F HE A LTH C A R E R E A L E STATE C O M P RIS ING 36 INV ESTM ENT P RO P ERT I E S AN D 2,800+ B E D S Western Australia (2) Queensland (2) New South Wal
Slide 45: Australian portfolio overview
~NZ$2.2b Australian portfolio overview PRECI NC T FOC US E D P O R T F O L IO W ITH A D IV E R SE TENANT BAS E PRIVATE HOSPITALS 17 hospitals (acute and specialty A M B U L ATO RY – mental health, rehabilitation) CARE 5 hospital operators 21% 79% of AUS portfolio value; 21 % 89% of AUS rent ER H WAL
Slide 46: New Zealand portfolio overview
~NZ$1.0b New Zealand portfolio overview STRO NG GR O WT H I N NZ PO R T F O L IO OV E R L AST 5 YEARS REFLEC T I N G P OS I T I V E C O ND IT IO NS F O R PR IVAT E O P ERATO RS PRIVATE HOSPITALS 9 hospitals (all acute) A M B U L ATO RY CARE 6 hospital operators 82% of NZ portfolio value; 8% 85% of N
Slide 47: Rent reviews undertaken in FY24
Rent reviews undertaken in FY24 H I GH P E R C E N TAGE O F TOTA L R E NT IS R E V IE W E D ANNUALLY WITH STRUC TURED 1 REV IEW M EC H ANISM S FY24 Rent reviews have been Jun-23 Rent p.a. Jun-24 Rent p.a. Increase Annualised Growth completed for 157 leases # (NZD) (NZD) (NZD) (Stable currency) in FY
Slide 48: Rent review profile
Rent review profile Rent Review Breakdown CPI Linked Reviews Turnover (0.8%) No Review BREAK DO WN OF (4.0%) CPI with PO RTFO LI O CPI REVIEWS rollover 3.7% Fixed <3% (3.5%) TYPE % CPI - Un-Capped 23.1% CPI enhanced Fixed 3%+ (19.2%) (9.3%) CPI - 2% Cap 0.1% CPI - 2.5% Cap 1.5% Market Review Other R
Slide 49: Core portfolio metrics
Core portfolio metrics 5 Y EAR T R E N D S H I GH L IG H T PO R TF O L IO STR E NG TH AND UND ERP IN LO NG-TERM P ERFO RM ANC E O C C UPANC Y WALE 20 100% 99.4% 99.1% 98.7% 98.8% 98.0% 19 18.7 98% 18.3 18.1 18 17.8 96% 17.6 Long-term track record of maintaining 94% 17 >98% Occupancy 92% 90% 16 15 20
Slide 50: Appendices: Additional development information
Appendices Additional development information Ascot Central, Auckland VITAL HEALTHCARE PROPERTY TRUST | ANNUAL RESULTS 2024 | 50
Slide 51: Committed developments – Australia & New Zealand
Committed developments – Australia & New Zealand DEVELOPM E N TS E N H A NC E E A R NING S G R O W TH AND IM P ROV E ASS E T Q UALIT Y ALL VALUES SHOWN IN $M DESCRIPTION OF WORKS DEVELOPMENT LAND SPEND COST TO FORECAST FORECAST STATUS COST1 VALUE TO DATE COMPLETE NET RETURN COMPLETION DATE Australia
Slide 52: Current and potential Australian development pipeline
Brisbane Current and potential Australian Brisbane BURANDA HEALTH HUB development pipeline in key LOGAN PRIVATE HOSPITAL Gold Coast healthcare precincts with COOMERA HEALTH CAMPUS growing populations QLD Gold Coast RDX SA LINGARD PRIVATE HOSPITAL LINGARD DAY CENTRE Newcastle NSW Sydney Sydney PLAYFO
Slide 53: Current and potential New Zealand development pipeline
Current and potential New Zealand development pipeline in key healthcare precincts with growing populations Auckland PARK ROAD, GRAFTON Tauranga ENDOSCOPY AUCKLAND ASCOT HEALTH PRECINCT 80 ASCOT, ASCOT HEALTH PRECINCT ORMISTON HOSPITAL EXPANSION STAGE 2 WAKEFIELD HOSPITAL BOULCOTT HOSPITAL EXPANSION
Slide 54: Glossary
Glossary AFFO Adjusted Funds From Operations is an alternate measure used for assessing distributable income. Essentially adjusts net profit after tax for non-cash/non-recurring items (i.e. NDI) then makes adjustments for items such as maintenance capex and lease incentives paid. Cap Rate Capitalisa
Slide 55: Disclaimer
Disclaimer This document has been prepared by Northwest Healthcare Properties Management Limited (the Manager) as manager of the Vital Healthcare Property Trust (the Trust). This document provides general information only and is not intended as investment, legal, tax, financial product or financial
Slide 56: Thank you
Thank you www.vhpt.co.nz Playford Health Hub (Stage 2), SA (Artist's impression)
Vital Healthcare Property Trust — FY2024 Earnings Presentation on 6ix