Vital Infrastructure Property Trust · TSX:VITL.UN
Vital Infrastructure Property Trust — Northwest Healthcare Properties Real Estate Investment Trust — Q4 2019 Earnings Presentation
54 slides from Vital Infrastructure Property Trust's earnings presentation, Mar 4, 2020
Slide 1: Q4 2019 Investor Update
Q4 2019 INVESTOR UPDATE March 4, 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 ✓ Deep healthcare real estate expertise S Ã O PA U L O 200+ professionals in 9 offices across 5 countries ✓ Entrepreneurial culture, i
Slide 4: 2019 Year in Review
2019 YEAR IN REVIEW Defensive Portfolio Financial Performance +60 bps +1.2 yrs +3.7% +7.2% Portfolio Occupancy AFFOPU NAVPU WALE +3.2M sqft +19.0% +3.8% Management Leased +35% Fees SPNOI Shareholder Return -640 bps -1.1x +$4.5B LTV Net Debt/ AUS & EU Expansion EBITDA +3 -38 bps +0.5 Yrs Institutiona
Slide 5: 2020 Strategic Priorities
2020 STRATEGIC PRIORITIES ADVANCING STRATEGIC GROWTH OF ASSET EUROPEAN AUSTRALASIAN PORTFOLIO INITIATIVES: MANAGEMENT PLATFORM EXPANSION MANAGEMENT ENTRY INTO UK MARKET • $2.9B (€2.0B) JV to invest in • European platform exceeds • Advanced the sale of its EXPANDS OPPORTUNITY European healthcare real
Slide 6: Global Healthcare Trends
GLOBAL HEALTHCARE TRENDS Ss NORTHWEST
Slide 7: Global Healthcare Market
GLOBAL HEALTHCARE MARKET Trillion Annual Global Healthcare Spend ($US) 10.4% Global Healthcare Expenditure (% GDP) 4-7% Annual Growth $ WA NORTHWEST
Slide 8: 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 9: 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 10: 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 11: NWH Platform
NWH PLATFORM ) 1] | ins ih
Slide 12: 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 13: Differentiated Strategy
DIFFERENTIATED STRATEGY SCALED $6.5B+ $8.0B $4.3B Platform Fee Bearing Capital Un-deployed Capital 24% CAGR from 2015-2019 JV Partnerships and Vital Trust Investment To be deployed in EUR and AUS CASH FLOW STABILITY EMBEDDED GROWTH 97%+ 13.8 Year 71%+ $402M Occupancy WALE Indexed Development Pipelin
Slide 14: Business Model
BUSINESS MODEL • WALE: 13.8 Years / Occupancy: 97.3% SPNOI (Levered) +5.8% • Inflation Indexed Leases: 71% Asset • Fee Bearing Capital: $8.0B Management • Target Capital Commitments: $11.5B +3.3% Development Accretion • Committed Developments: $402M +0.4% • Development Yield: 100bps spread +9% Annua
Slide 15: Defensive Portfolio
DEFENSIVE PORTFOLIO DEFENSIVE HIGH HIGH QUALITY EARNINGS EMBEDDED VALUE SECTOR DEMAND PORTFOLIO GROWTH IN PROJECTS Private healthcare is Ageing demographics and Globally diversified in Acquisition opportunities $402M of committed typically a non- growing populations major cities with a focus from in
Slide 16: Avenues for Future Growth
AVENUES FOR FUTURE GROWTH New Operator • Brownfield and greenfield Partnerships • Increased scale in aged care developments • Investment in new • International expansion • Scale and lease back geographies that align with • Supporting operator opportunities Northwest’s investment acquisitions and gro
Slide 17: Financial Highlights
FINANCIAL HIGHLIGHTS 16
Slide 18: Financial Dashboard
FINANCIAL DASHBOARD As Reported Normalized Target AFFO/unit (5) $0.84/unit $0.92/unit $0.95/unit LTV (6) 42.2% / 49.2% 38.7% / 43.1% ~40% NAV (7) $13.17/unit ~$13.20/unit $13.50/unit Occupancy / 97.3% 97.3% 97%+ WALE 13.8 years 13.8 years 14+ years Portfolio Quality 17
Slide 19: Proportionate Income Statement
PROPORTIONATE INCOME STATEMENT 3.5% AFFO PER UNIT For the year ended December 31 GROWTH DRIVEN BY C$M 2018 2019 % change 3.8% SPNOI growth & ACCRETIVE ACQUISITIONS, Net Operating Income 195.3 224.9 15.2% $635M proportionate Management Fee Income 27.8 28.8 3.8% acquisitions IMPROVED SPNOI AND Interes
Slide 20: Earnings Growth
EARNINGS GROWTH Annual AFFO/Unit Bridge $1.2 $1.0 $0.04 ($0.11) $0.14 ($0.04) $0.8 $0.6 $0.4 $0.81 $0.84 $0.2 $0.0 2018 AFFO/Unit Acquisitions SPNOI Deleveraging FX 2019 AFFO/Unit +1.8B 3.8% +$1.2B $644M 4% Global acquisitions SPNOI growth JV capital deployed Equity issuance FX depreciation 19
Slide 21: Proportionate Balance Sheet
PROPORTIONATE BALANCE SHEET 14% NAV PER UNIT As at December 31, GROWTH DRIVEN BY C$M 2018 2019 % change +$635M REDUCED LEVERAGE, Investment properties 3,403.5 4,028.2 18.4% Proportionate acquisitions Global Manager 267.8 525.0 96.0% IMPROVED PROPERTY Other Assets 105.6 382.4 262.0% VALUATIONS AND VA
Slide 22: NAV Growth
NAV GROWTH Significant Value Creation Annual NAV/Unit Bridge $0.87 ($0.38) ($0.59) 24% CAGR $1.59 (0.62) 2,256 $13.17 1,433 1,492 $12.30 1,031 768 2015 2016 2017 2018 2019 Q4-18 Global Revaluation Deleveraging FX Other Q4-19 NAV/Unit manager adj. gain NAV/Unit Value creation Access to WACR SPNOI Dev
Slide 23: Significant Value Creation in Global Asset Manager
SIGNIFICANT VALUE CREATION IN GLOBAL ASSET MANAGER Available AUM NWH Stabilized Status Capacity Term $8.0B OF GLOBAL CAPITAL ($B) ($B) Ownership Fees ($M) COMMITMENTS DRIVING Active Australian Core Active $3.4 $1.7 30% Perpetuity $20 SIGNIFICANT VALUE Hospital JV CREATION IN THE REIT’S Vital Active
Slide 24: 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 25: Strategic Transactions: AUS JV Expansion & HSO Acquisition
STRATEGIC TRANSACTIONS: 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 c
Slide 26: Deleveraging
DELEVERAGING Historical LTV Trend Proportionate Net Debt/EBITDA Bridge 60.0% (0.96x) -640 bps YOY (1.06x) 56.1% 55.5% 55.7% 0.24x 55.0% 53.1% 51.5% 50.0% 49.2% 9.78x 45.0% 8.00x 40.0% 35.0% Q4 Net Equity Raise Acquisitions Dispositions Target Net Debt/EBITDA Debt/EBITDA Key Drivers Equity raised to
Slide 27: 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 (4.0%) ($0.04) ($0.54) AFFO/Unit NAV/Unit
Slide 28: Investment Activity
INVESTMENT ACTIVITY 27
Slide 29: Consolidated Investment Activity
CONSOLIDATED INVESTMENT ACTIVITY 2019 TRANSACTIONS EUROPEAN PORTFOLIO GROWTH TRANSACTION TYPE REGION C$M 66.4% 997 1,000 HSO Acquisition Acquisition AUS 1,200 773 800 599 European Clinics Acquisition GER / NL 184 600 400 European MOB’s Acquisition GER 13 200 Canadian MOB’s Acquisition CAD 57 - 2018
Slide 30: Healthscope Sale & Leaseback
HEALTHSCOPE SALE & LEASEBACK CORE HEALTHCARE INFRASTRUCTURE IN MAJOR MARKETS NORWEST • Transformational 11 property, $1.2B transaction solidifies the REIT as the leader in Australian healthcare real estate ▪ Highly complimentary to NWH’s existing portfolio ▪ Deepens relationship with Australia’s 2nd
Slide 31: 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 32: Accretive Development & Expansion Pipeline
ACCRETIVE DEVELOPMENT & EXPANSION PIPELINE • ~$402M (fully consolidated; $165M 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 33: Portfolio Overview
PORTFOLIO OVERVIEW 32
Slide 34: Global Portfolio
GLOBAL PORTFOLIO $1.2B 2.3% $0.8B 4.7% GROSS ASSETS SP NOI GROSS ASSETS SP NOI 93.0% 5.2 $6.5B 97.3% 15.0 OCCUPANCY YEAR WALE TOTAL ASSETS OCCUPANCY YEAR WALE 13.8 97.3% $0.8B 3.6% WALE Occupancy $3.7B 2.7% GROSS ASSETS SP NOI 175 3.8% GROSS ASSETS SP NOI Total Properties 100% 19.3 SPNOI(8) 99.3% 17
Slide 35: Asset Mix by Region and Segment
ASSET MIX BY REGION AND SEGMENT ON A PROPORTIONATE Proportionate NOI Diversification BASIS HOSPITALS ACCOUNT FOR 52% OF NET OPERATING INCOME INCREASING FOCUS ON HEALTHCARE INFRASTRUCTURE, INCLUDING ACUTE/POST ACUTE HOSPITALS AND RELATED BUILDINGS IN EACH OF ITS MARKETS Detailed Segment Breakdown AUS
Slide 36: Strategic Relationships and Tenant Diversification
STRATEGIC RELATIONSHIPS AND TENANT DIVERSIFCATION STRATEGIC RELATIONSHIPS ALLOWING FOR BEST- TOP 10 TENANTS BY GROSS RENT(10) IN-CLASS PERFORMANCE TENANT REGION % GROSS RENT • Alberta Health Services (6 Locations): 1 Largest provincial healthcare provider Healthscope Limited 15.8% to 4.3 M Albertans
Slide 37: Case Study #1 – Epworth Eastern Hospital, Melbourne
CASE STUDY #1 – 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 38: Case Study #2 – Median, Germany
CASE STUDY #2 – 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 39: Case Study #3 – Rede D'Or, Brazil
CASE STUDY #3 – 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 40: Investment Opportunity
INVESTMENT OPPORTUNITY 39
Slide 41: Relative Valuation
RELATIVE VALUATION THE REIT IS TRADING AT SIGNIFICANT DISCOUNT TO ITS PEERS ON AN AFFO MULTIPLE BASIS 0.4% - Based on NWH.UN’s closing unit price of $12.80/unit as of March 4 2020, and normalized AFFO/Unit of $0.92 per year; NWH.UN’s NAV/unit is based on Q4-19 of $13.17. 40
Slide 42: Investor Factsheet
INVESTOR FACTSHEET Ticker NWH.UN Listed Exchange TSX Distribution Payable Monthly 49% Other Income/ Distribution Type 51% Return on Capital Unit Price (March 4, 2020) $12.80 Market Capitalization ~$2.0B Distribution Yield 6.5% 52-Week Trading Range $10.88-$13.35 Volume Weighted Avg. Price (VWAP) (20
Slide 43: Regional Portfolio Overviews
APPENDIX 1 REGIONAL PORTFOLIO OVERVIEWS 42
Slide 44: Portfolio Profile
PORTFOLIO PROFILE PORTFOLIO COMPRISES GLOBAL HEALTHCARE REAL ESTATE INFRASTRUCTURE 175 PROPERTIES TOTALING 14.5M Q4 2019 Canada Brazil Europe Vital Trust NWAUS Platform* SQUARE FEET OF GLA IN SIX COUNTRIES Number of 57 8 39 45 26 175 STRONG OPERATING Properties FUNDAMENTALS WITH 79% MOB & 22% MOB &
Slide 45: 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 1,067 NT tenants NU ◼ 92.2% occupancy and ~5.0 year WALE ⚫ High qualit
Slide 46: 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 19.6 year WALE RORAIMA AMAPÁ ⚫ Stable cash flow with long-term, t
Slide 47: 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 ◼ 97.3% occup
Slide 48: 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 ~$1.9B in existing assets ⚫ Portfolio of 26 Properties of ~2.8M Square Feet ◼ 17 hospitals, 6 medica
Slide 49: 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, 5 aged care assets and 4 development lots ◼
Slide 50: Management Biographies
APPENDIX 2 MANAGEMENT BIOGRAPHIES 49
Slide 51: 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 52: Notes
NOTES 1. Based on NWH.UN’s closing unit price of $12.80/unit as of March 4, 2020. 2. Based on the REIT’s distribution policy of $0.80/unit per annum and normalized Q4-19 AFFO of $0.92/unit. 3. Based on total assets of NWH, Vital Trust on a fully consolidated basis including post-quarter acquisitions
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
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Northwest Healthcare Properties Real Estate Investment Trust — Q4 2019 Earnings Presentation on 6ix