Vital Healthcare Property Trust · NZX:VHP
Vital Healthcare Property Trust — FY2014 Earnings Presentation
37 slides from Vital Healthcare Property Trust's earnings presentation, Aug 14, 2014
Slide 1: 2014 Annual Result
2014 Annual Result Creating capacity to meet demand Hurstville Private Hospital extension, Hurstville, Sydney
Slide 2: Agenda
Agenda Result summary Financial summary Healthcare sector Investment portfolio Development & acquisition Strategy and outlook David Carr Stuart Harrison Chief Executive Officer Chief Financial Officer Note: This annual result presentation should be read in conjunction with the New Zealan
Slide 3: Result summary
Result summary
Slide 4: Result highlights
Result highlights Delivering a strong platform for growth Earnings & Gross rental income of $59.4m capital Net profit after tax of $37.4m, up $2.7m or 7.8% management Net distributable income1 of $34.7m, up $6.5m or 23.1% Delivered on FY14 guidance for cash distribution of 7.9 cpu LVR2 of
Slide 5: 10 year total return performance
10 year total return performance Well executed strategy delivering strong total returns Index rebased to 100 350 S&P/ASX 200 A-REIT Index NZSX 50 Index NZ Property Gross Index VHP 10 YearCompound 10 Year Compound Annual Annual Growth Growth RateRate 300 VitalHealthcare Vital Healthcare 12.1% 12.1% v
Slide 6: Financial summary
Financial summary
Slide 7: Financial performance
Financial performance Solid underlying gains from core Australian activities Actual Actual change change All NZD$m FY14 FY13 $m % Gross rental income 59.4 59.9 -0.4 -0.7% Net rental income 58.0 57.9 0.1 0.2% Operating profit before tax 50.0 50.6 -0.6 -1.3% Gross distributable income 34.9 33.6 1.3 3.
Slide 8: Gross rental income
Gross rental income Underlying growth pre currency +9% NZ$ millions 70 1.1 -5.9 65 3.1 1.3 59.9 59.4 60 55 50 45 40 2013 Acquisitions / Development Rent reviews FX 2014 disposals income 8
Slide 9: Financial position
Financial position Strong capital position provides financial flexibility Actual Actual change change All NZD$m FY14 FY13 $m % Net Tangible Assets 1.04 1.01 3.4% Investment properties 613.1 618.7 -5.6 -0.9% Total assets 616.0 629.5 -13.5 -2.1% Bank debt 191.4 266.1 -74.7 -28.1% Unit holder funds 353
Slide 10: Investment property
Investment property Stable investment portfolio notwithstanding currency influence NZ$ millions 700.0 21.0 15.2 -41.8 618.7 613.1 600.0 500.0 Australian Australian A$419.5 portfolio 400.0 A$392.4 portfolio translated in A$ into NZ$ 300.0 200.0 NZ 100.0 $155.0 portfolio $161.6 in NZ$ - FY13 Capital R
Slide 11: LVR movement
LVR movement Strong balance sheet with capital ready to deploy LVR 45% 42.4% -6.1% 40% -0.9% -2.3% 35% -2.4% -1.9% 2.6% 31.4% 30% 25% 20% 15% 10% 5% 0% 2013 DRP + Rights Revaluation Cashflow from Realised FX FX Translation Development 2014 Issue gain operations translation Capex hedges 11
Slide 12: Foreign exchange – how it works
Foreign exchange – how it works Proactive currency management aims to reduce volatility, but can’t eliminate it Vital’s ‘natural hedge’ + FEC’s Rising Falling reduces the Rising Falling NZD:AUD NZD:AUD overall influence NZD:AUD NZD:AUD of FX movements Financial Performance [No hedging] [Hedging] Ren
Slide 13: Foreign exchange – what's happened
Foreign exchange – what’s happened Hedging helps mitigate balance sheet and earnings volatility NZD :AUD FROM QTRLY RELEASES LINKED TO Y/E TABLES 1.00 Sep-13 Dec-13 Mar-14 Jun-14 1 Hedging policy 2 3 4 Q1 0-6 months: 60%-90% Q2 Q3 Q4 ross Rent 14.93450%-80% 7-12 months: 29.889 44.5 59.4 BITDA 0.95 9
Slide 14: Foreign exchange – what's happened
Foreign exchange – what’s happened Hedging helps mitigate balance sheet and earnings volatility Year End Financial Position Financial Performance - (Australian operations in NZD) Exchange impact NZ$000's NZ$000's FEC Borrowings Liabilities Properties $500,000 $40,000 $400,000 Unhedged $30,000 Realis
Slide 15: Treasury capital management
Treasury capital management Vital is well capitalised, with diversified long term capital partners Actual Actual All NZD$ (unless otherwise stated) FY14 FY13 Drawn debt at period end ($ million) 192.6 266.7 Facility size ($ million) 369.8 285.9 ANZ (in NZ and Australia) Weighted average cost of de
Slide 16: Healthcare sector update
Healthcare sector update Underlying trends positive
Slide 17: Fundamental sector drivers
Fundamental sector drivers Underlying drivers create a compounding effect on demand for healthcare services Increasing and ageing population, rising life expectancy Public system under pressure Strong private health insurance trends Supportive regulatory framework, relatively inelastic to change Hea
Slide 18: Investment portfolio update
Investment portfolio update Core portfolio in great shape
Slide 19: Portfolio diversification
Portfolio diversification 25 properties comprising over 1,500 hospital beds and 72 operating theatres NT QLD 1 2 1 WA 1 SA 1 NSW 6 VIC 3 1 1 NZ Key 2 5 14 Acute TAS 3 Psychiatric 1 1 Rehabilitation 7 MOB’s* * Medical Office Buildings 19
Slide 20: Core portfolio metrics
Core portfolio metrics Sector leading metrics underpin defensive characteristics 100 Occupancy Continued high occupancy reflects WALT profile Percentage 95 99.2 99.3 99.5 99.3 and high lease renewal rates 96.3 90 Jun-11 Jun-12 Jun-13 Jun-14 Sector avg. 16 WALT 14 12 10 WALT providing secure and defe
Slide 21: Benign short term lease expiry profile
Benign short term lease expiry profile Resolved MercyAscot expiry, focus squarely now on Allamanda 21
Slide 22: Lease expiry profile (5 year intervals)
30 year expiry profile (5 year intervals) Management will target lease expiries within 2035 – 2039, which recognises the long term asset management approach adopted for future opportunities. Vacancy Total expiry Largest single expiry 40% 30% Lease expiry by income (%) 20% 12.2% 10.9% 10% 6.7% 5.8% 2
Slide 23: Investment portfolio
Investment portfolio Multiple drivers of positive portfolio revaluations Core gains from structured rent growth, enhanced WALT Improved post-development operational performance Redevelopment success crystallising positive revaluations Rising demand for healthcare real estate and wider market sentime
Slide 24: Investment portfolio
Investment portfolio Strong portfolio revaluation result, WACR1 firmed 31 bps New Metrics Australia Total Zealand Gain ($) 8.9 6.3 15.2 Increase (%) 2.0% 4.1% 2.5% Asset movements: Increases 15 5 20 Declines 2 2 4 Strong gains across portfolio underpinned by enhanced core portfolio metrics, brownf
Slide 25: Value add development opportunities
Value add development opportunities Brownfield pipeline creates capacity for operators, enhances future earnings 24 month forecast ~A$85m +200 Increased bed numbers delivers economies of scale for (+14% growth) operators +7 Additional operating theatres provides greater flexibility to meet (+10% gro
Slide 26: Development & acquisition update
Development & acquisition update 26
Slide 27: Hurstville Private Hospital – Development update
Hurstville Private Hospital – Development update Investment thesis at time of acquisition supported future redevelopment Acquisition details Acquired in April 2012 for A$12.3m on an initial yield of 10% Currently 73 bed hospital, with 3 theatres, specialising in surgical and obstetrics New 20
Slide 28: Hurstville Private Hospital
Hurstville Private Hospital Stage 1 design allows for opportunity to add further capacity as demand requires Photograph taken December 2013 28
Slide 29: Hurstville Private Hospital
Hurstville Private Hospital Scheduled completion July 2015 Photograph taken May 2014 29
Slide 30: Hurstville Private Hospital
Hurstville Private Hospital Hurstville will be one of Sydney’s leading private hospitals on completion Photograph taken August 2014 30
Slide 31: The Marian Centre psychiatric hospital acquisition
The Marian Centre psychiatric hospital acquisition First Western Australia acquisition, diversified presence now in all 6 Australian states Acquisition details Acquired for A$13.5m on an initial yield of 8.5% Currently a 31-bed stand-alone private psychiatric hospital Located in the establishe
Slide 32: The Marian Centre psychiatric hospital
The Marian Centre psychiatric hospital Current facility 32
Slide 33: The Marian Centre psychiatric hospital
The Marian Centre psychiatric hospital Architects perspective of completed redevelopment1 Note 1: Includes proposed Stage II works 33
Slide 34: Strategy and outlook
Healthcare Property Trust Strategy and outlook
Slide 35: Vital's strategic value drivers
Vital’s strategic value drivers Strong execution on ‘sum of parts’ Management Aligned / Stable / Experienced / Credible / Capable Brownfield Sustainable Stabilised developments Capital & long term Acquisitions portfolio (capacity Treasury earnings & expansion) value 30-year lease A$28m Hurstvill
Slide 36: Summary and outlook
Summary and outlook Earnings & Solid financial result, distributable earnings growth and strong capital position capital Partnership model approach delivering new opportunities across the healthcare management spectrum, Vital strengthening its market position Portfolio Strong portfolio metrics
Slide 37: Disclaimer
Disclaimer This presentation has been prepared by Vital Healthcare Management Limited (the "Manager") as manager of the Vital Healthcare Property Trust (the "Trust"). The details in this presentation provide general information only. It is not intended as investment or financial advice and must not
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