Vital Healthcare Property Trust · NZX:VHP
Vital Healthcare Property Trust — HY2024 Earnings Presentation
43 slides from Vital Healthcare Property Trust's earnings presentation, Feb 15, 2024
Slide 1: HY24 interim results presentation
HY24 interim results presentation Delivering on our strategy 15 F E B R U A RY 2 0 24
Slide 2: Contents
Contents Presenters Aaron Hockly SENIOR VICE PRESIDENT AND FUND MANAGER Investing in healthcare property Michael Groth across Australia and New Zealand 3 CHIEF FINANCIAL OFFICER HY24 highlights 4 Financial results & capital management 10 Richard Roos Portfolio16 CO-HEAD ANZ REGION Developments20 Fut
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 D E FE NS I V E S E C TOR NT Non-discretionary or high priority discretionary spending Low impact from economic or business cycles QLD Strong demand for healthcare pro
Slide 4: HY24 highlights
HY24 highlights rae She
Slide 5: HY24 highlights
HY24 highlights NON-CORE ASSET SALES AND DEVELOPMENTS HAVE HELPED IMPROVE THE RESILIENCE OF THE PORTFOLIO 1st 7% NZ$222.1m P L AC E F O R L I ST E D OF V I TA L ' S N E T N O N - CO R E ASS E T S A L E S H E A LT H C A R E L E T TA B L E A R E A L E AS E D OV E R C Y 231 G LO B A L LY I N E S G OR R
Slide 6: Sustainability
Sustainability Green Star Vital was acknowledged as Sector Vital is committed to targeting a minimum of 5 star Leader (the highest possible Green Star ratings for all new development projects achievement) by GRESB for ESG and currently has 9 new developments registered in healthcare for all listed e
Slide 7: Sustainability (Cont'd) Current focus
Sustainability (Cont'd) Current focus Volunteering Climate Related Disclosure Northwest launched a company wide volunteering Under New Zealand legislation, Vital will submit a Climate Related Disclosure policy. Our team has completed volunteering (CRD) prior to October 2024, aligning to the XRB Aote
Slide 8: Executing on our strategy
Executing on our strategy Strategic initiatives Delivery over the five years ended 31 December 2023 Grow AFFO and distributions by 2-3% 11.4% growth in distributions per unit or 2.3% per annum per unit per annum over the medium term Reduction in AFFO per unit over last 18 months primarily due to rap
Slide 9: Strategy reaffirmed
Strategy reaffirmed IN DECEMBER 2023, VITAL'S MA JORITY INDEPENDENT BOARD APPROVED AN UPDATED STRATEGY The update is substantially in line with previously announced strategy. Key elements include: Healthcare property is a growing investment class due to its strong underlying tenant demand which Cont
Slide 10: Financial results & capital management
Financial results & capital management
Slide 11: Financial performance
Financial performance PRO P ERT Y E A R N I N GS G R O W T H HAS FAC IL ITATE D AFFO G RO WTH OV ER TH E M ED IUM TERM AC T UA L AC T UA L (%) HY2024 HY2023 C HA N GE Net property income 72,399 72,068 0.5% Corporate expenses (2,664) (2,034) 31.0% Management fees have reduced Management fees (12,464)
Slide 12: Net property income
Net property income 1.8% NPI GR O W T H (EXC L. F X) D U E TO D E V E LO PM ENTS AND RENT REV IEWS Headline growth impacted by non-core assets sales which have improved Vital's overall property portfolio Development income – rentalisation N E T P R O P ER T Y IN C O M E B R ID GE ($M) of capital exp
Slide 13: Balance sheet
Balance sheet NO N-COR E ASS E T SA L E S H AV E F U L LY F U ND E D D EV ELO PM ENT AND OTH ER C AP EX D URING H Y24 AC T UA L AC T UA L (%) H Y24 FY23 C HA N GE Decrease due to: Investment properties 3,218,117 3,380,720 4.8% Sale of $164m2 of non-core assets Unrealised revaluation loss of Other as
Slide 14: Prudent gearing maintained
Prudent gearing maintained SEEK I NG TO M AI N TAIN B A L A NC E SH E E T G E A R ING BELO W 40% AT ANY P O INT IN TIM E B A NK FAC ILITIES 31 D E C 2023 31 DEC 2022 Debt to gross assets (Trust Deed) 1 38.3% 33.7% No debt expiring until Bank loan to value ratio – actual 2 39.8% 35.5% March 2025; wel
Slide 15: Interest rate hedging profile
Interest rate hedging profile INTER EST R AT E C OSTS SU B STA NT IA L LY HE D G E D F O R OV ER 2 YEARS TO H ELP M ANAG E RIS K RATE S 31 DE C 31 D EC H ED G ING M ATURIT Y P RO FILE ($A) 2023 2022 1,000,000,000 5.00% Weighted average cost of debt1 5.14% 4.57% 900,000,000 4.50% 800,000,000 4.00% We
Slide 16: Portfolio
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Slide 17: 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 CPI aligned leases support income growth G EO G RAP H IC D IV ERS IFIC ATIO N (BY VALUE) 98.2% 4.1% growth for same properties on a like-for-like and constant currency basis; 1.8% (excl. FX) grow
Slide 18: Non-core asset disposals in line with strategy
Non-core asset disposals in line with strategy OVER N Z$220M OF NO N-C O R E ASSE TS OV E R C Y23 AT A SM ALL D IS C O UNT TO BO O K VALUE NZ$222.1m Non-core asset sales, coupled with the reinvestment into developments, have improved Vital's portfolio through of non-core assets sold increasing expos
Slide 19: Healthcare valuations underpinned by strong demand
Healthcare valuations underpinned by strong demand Healthcare assets Institutional demand Limited high Vital has been acquiring have become a for healthcare quality assets and developing mainstream assets evidenced by drive premium irreplaceable precinct asset class several new entrants asset pricin
Slide 20: Developments
Developments
Slide 21: Development strategy
Development strategy Strategy Achievements Current focus Continue to develop through Several large developments Vital has several shovel the cycle to enhance close to completion ready projects across Vital’s portfolio, support reducing capital required Australia and New operating partners and in fut
Slide 22: Committed development pipeline
Committed development pipeline NZ$512m NZ$213m NZ$170m committed remaining expected to be spent over developments1 to be spent the next 12 months (funded through existing debt capacity & asset sales) 5.7% 50bps weighted average weighted average development yield development yield versus in use or ex
Slide 23: Developments nearing completion
Developments nearing completion Wakefield Private Hospital Stage 2 Ormiston Hospital - Stage 1 Asset Type Hospital (Acute) Asset Type Hospital (Acute) Total Cost NZ$91.5m Total Cost NZ$42.9m Net Project Yield 5.6% Net Project Yield 5.1% Completion Date Stage 2A - May-24 & Stage 2B - Feb-25. Vital's
Slide 24: Precinct creation: Ormiston Hospital Case Study
Precinct creation: Ormiston Hospital Case Study rmiston Hospital (majority operated by Southern Cross) acquired in 2017 for NZ$33.0m. O The then ~5,000sqm facility was a 3 level, 26 bed facility with 6 Operating Theatres. 46m ~5,000sqm expansion due to complete in July 2024 and is 100% pre-leased $
Slide 25: Future focus
Future Ko ngā pae tawhiti whaia kia tata, ko ngā pae tata, whakamaua kia tina. focus The potential for tomorrow depends on what we do today.
Slide 26: 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 EARNING S G RO WTH Guidance Vital is a 'best in class' investment platform. FY24 distribution guidance of at least 9.75 cpu The board and management will seek to capitalise <90% payout ratio retained on Vital's uniqu
Slide 27: Appendices
Appendices
Slide 28: 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 29: Committed developments – Australia & New Zealand (cont'd)
Committed developments – Australia & New Zealand (cont'd) 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
Slide 30: 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 HY2024 HY2023 (%) CHA NG E Operating profit before tax and other income 37,480 35,888 4.4% Add/(deduct): Current tax expense (12,532) (7,916) 58.3% Incentive fee 3,300 7,510 56.1% Realised and unrealised fx on borro
Slide 31: Net Tangible Assets
Net Tangible Assets REVALUAT I ON LOSS H AS L E D TO SMA L L NTA D E CLINE P ER UNIT NTA P ER UNIT BRIDG E (HY24) NZ$141m or 4.3% $3.20 reduction from June 2023 $3.10 $3.00 $2.96 ($0.19) $2.90 $2.80 ($0.02) $0.01 ($0.03) ($0.01) $2.70 $2.70 $2.60 $2.50 $2.40 FY23 Property revaluations Currency trans
Slide 32: Movement in investment property
Movement in investment property STRO NG C P I LI N KE D H E A LTH C A R E PO R T F O L IO O FFS E TS C AP RATE S O FTENING TOTA L P ORTF OLIO VALUE B RI DG E (1H FY24) (N Z$ M I L LI O N S) K EY HY24 RESULTS $3,500 141 (141) ~44% of Vital’s portfolio (by 3,381 21 (164)5 (19) 3,218 value) independent
Slide 33: 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 31 DECEMBER 2023 1YR 5YR (P.A.) 10YR (P.A.) SINCE 2004 (P.A.) 2 V H P VS S&P NZ X REAL ESTAT E IN DEX 1,000 Vital 2.6% 4.7% 10.0% 10.5% Vital 900 S&P/NZX 5
Slide 34: Australian portfolio overview
~NZ$2.5bn Australian portfolio overview GEO GR A P H I C A LLY D ISPE R SE D AU STR A L IA N PO R TFO LIO C O NTINUES TO P ERFO RM WELL PRIVAT E HOSPITALS 15 hospitals (acute and specialty – mental health, rehabilitation) AG E D C A R E Four hospital operators A M B U L ATO RY 79% of AUS portfolio v
Slide 35: New Zealand portfolio overview
~NZ$1.0bn New Zealand portfolio overview KEY NEW Z E A L AN D M A R K E T PE R F O R MING STR ONG LY PRIVATE HOSPITALS 9 hospitals (all acute) A M B U L ATO RY CARE 6 hospital operators 19% 81% of NZ portfolio value; R1 9% 83% of NZ rent HE T WALE: 21.5 years O AMBULATORY CARE 1% 8 AL HOSPIT 6 asset
Slide 36: Investment properties
Investment properties AS AT 31 D EC EM BER 2023 ~NZ$3.5B N P OR T FOLIO O F HE A LTH C A R E R E A L E STATE C O M P RIS ING 38 INV ESTM ENT P RO P ERTIES AND 2,800+ BEDS Western Australia (2) Queensland (4) New South Wales (8) Auckland (5) Abbotsford Private Hospital Baycrest Aged Care Darlington A
Slide 37: 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 CY24 EXPIRIES — 1 10-year average annual lease expiry of only 1.5% (as % of total portfolio income) Total potential expiries 1.2% in the process of of NZ$4.8m or 3.2% of be
Slide 38: Rent reviews undertaken in HY24
Rent reviews undertaken in HY24 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 Jun-23 Rent p.a. Dec-23 Rent p.a. Increase Growth # (NZD) (NZD) (NZD) (Stable currency) Rent reviews have been Australia AUS 30 13,227,706 13,723,610 495,904
Slide 39: Rent review profile
Rent review profile Greater of Market or CPI (0%) No Review (3.4%) Lesser of CPI Stepped / Structured BREAK DO WN OF and 3% (1.3%) PO RTFO LI O CPI REVIEWS (2.9%) Fixed <3% (1.5%) TYPE % Fixed 3%+ CPI - Un-Capped 29.6% CPI x 1.5+ (6.9%) (18.8%) Market Review CPI - 2.5% Cap 1.5% (1.0%) CPI - 3% Cap 1
Slide 40: 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% 99.5% 99.1% 99.0% 19.0 19.2 98.4% 98.2% 98% 18 17.9 17.8 96% 17 17.2 Long-term track record of maintaining 94% 16 92% >98% Occupancy 90% 2019 202
Slide 41: 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 42: 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 43: Thank you
Thank you www.vhpt.co.nz Belmont Private
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