Vital Healthcare Property Trust · NZX:VHP

Vital Healthcare Property Trust — Investor Presentation (May 2024)

43 slides from Vital Healthcare Property Trust's investor presentation, May 2024

1. Slide 1: Delivering on our strategy

   3UHVHQWDWLRQ QWR R 1=6$$:HOOLQJWRQ Delivering on our strategy 0$< 2024

2. Slide 2: Contents

   Contents Presenter Aaron Hockly SENIOR VICE PRESIDENT AND FUND MANAGER Investing in healthcare property across Australia and New Zealand 3 HY24 highlights 4 Financial results & capital management 10 Portfolio 16 Developments 20 Future focus 25 Appendices 27 All amounts are in NZD unless otherwise sh

3. 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 DEFENSIVE SECTOR NT Non-discretionary or high priority discretionary spending Low impact from economic or business cycles QLD Strong demand for healthcare property com

4. Slide 4: HY24 highlights

   HY24 highlights

5. 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

6. 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

7. 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

8. 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 rapi

9. 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 Conti

10. Slide 10: Financial results & capital management

    Financial results & capital management

11. Slide 11: Financial performance

    Financial performance PROPERT Y EARNINGS GRO WTH HAS FACILITATED AFFO GRO WTH OVER THE MEDIUM TERM AC TUAL AC TUAL (%) 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) (16,748) 25.6% because

12. Slide 12: Net property income

    Net property income 1.8% NPI GRO WTH (EXCL. FX) DUE TO DEVELOPMENTS AND RENT REVIEWS Headline growth impacted by non-core assets sales which have improved Vital's overall property portfolio Development income – rentalisation NE T PROPERT Y INCOME BRIDGE ($M) of capital expenditure and holding +0.5%

13. Slide 13: Balance sheet

    Balance sheet NONCORE ASSE T SALES HAVE FULLY FUNDED DEVELOPMENT AND OTHER CAPEX DURING HY24 AC TUAL AC TUAL (%) HY24 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 assets 51,632 48,992 5.4% ($141

14. Slide 14: Prudent gearing maintained

    Prudent gearing maintained SEEKING TO MAINTAIN BAL ANCE SHEE T GEARING BELO W 40% AT ANY POINT IN TIME BANK FACILITIES 31 DEC 2023 31 DEC 2022 1 Debt to gross assets (Trust Deed) 38.3% 33.7% No debt expiring until 2 Bank loan to value ratio – actual 39.8% 35.5% March 2025; well Bank loan to value ra

15. Slide 15: Interest rate hedging profile

    Interest rate hedging profile INTEREST RATE COSTS SUBSTANTIALLY HEDGED FOR OVER 2 YEARS TO HELP MANAGE RISK RATES 31 DEC 31 DEC HEDGING MATURIT Y PROFILE ($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% Weighted average fixed rate 3.27%

16. Slide 16: Portfolio

    Portfolio in

17. Slide 17: Portfolio overview

    Portfolio overview AUSTRAL ASIA' S HIGHEST QUALIT Y INVESTABLE HEALTHCARE PORTFOLIO CPI aligned leases support income growth GEOGRAPHIC DIVERSIFICATION (BY VALUE) 4.1% growth PWFS):GPSTBme properties on a like-for-like and constant currency basis; 1.8% (excl. FX) growth in net property income after

18. Slide 18: Non-core asset disposals in line with strategy

    Non-core asset disposals in line with strategy OVER NZ$220M OF NONCORE ASSE TS OVER CY23 AT A SMALL DISCOUNT TO BOOK 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 exposure to healthca

19. 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

20. Slide 20: Developments

    Developments

21. 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

22. Slide 22: Committed development pipeline

    Committed development pipeline NZ$503m NZ$171.4m NZ$170m committed remaining expected to be spent over developments1 to be spent &< (funded through existing debt capacity & asset sales) CQT weighted average weighted average development yield development yield versus in use or expected completion yie

23. 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 c

24. Slide 24: Precinct creation: Ormiston Hospital Case Study

    Precinct creation: Ormiston Hospital Case Study Ormiston Hospital (majority operated by Southern Cross) acquired in 2017 for NZ$33.0m. 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 (i

25. 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.

26. Slide 26: Outlook & guidance

    Outlook & guidance CONTINUED DELIVERY AND FOCUS ON ADDING VA LU E AND EARNINGS GRO 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 unique position, high

27. Slide 27: Appendices

    Appendices

28. Slide 28: Committed developments – Australia & New Zealand

    Committed developments – Australia & New Zealand DEVELOPMENTS ENHANCE EARNINGS GRO WTH AND IMPROVE ASSE T QUALIT 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 GCHPK - RDX (QLD) 9

29. Slide 29: Committed developments – Australia & New Zealand (cont'd)

    Committed developments – Australia & New Zealand (cont'd) DEVELOPMENTS ENHANCE EARNINGS GRO WTH AND IMPROVE ASSE T QUALIT 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 Macarthur

30. Slide 30: Adjusted funds from operations (AFFO)

    Adjusted funds from operations (AFFO) CONSERVATIVE PAYOUT RATIO RE TAINED HY2024 HY2023 (%) CHANGE 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 borrowings (net of

31. Slide 31: Net Tangible Assets

    Net Tangible Assets REVALUATION LO SS HAS LED TO SMALL NTA DECLINE PER UNIT NTA PER UNIT BRIDGE (HY24) 1=PRU $3.20 UHGXFWLRQIURP-XQH $3.10 $3.00 $2.96 ($0.19) $2.90 $2.80 ($0.02) $0.01 ($0.03) ,QFUHDVHGWRDW $2.70 ($0.01) $2.70 0DUFK $2.60 $2.50 $2.40 FY23 Property revaluations Currency translation R

32. Slide 32: Movement in investment property

    Movement in investment property STRONG CPI LINKED HEALTHCARE PORTFOLIO OFFSE TS CAP RATE SOFTENING TOTAL PORTFOLIO VALUE BRIDGE (1H FY24) (NZ$ MILLIONS) KEY HY24 RESULTS $3,500 141 (141) ~44% of Vital’s portfolio (by 3,381 21 (164)5 (19) 3,218 value) independently valued at 31 $3,000 December 2023 $

33. Slide 33: Comparative returns

    Comparative returns VITAL MAINTAINS LONGTERM OUTPERFORMANCE VS BENCHMARK ON A TOTAL RE TURN 1 BASIS TOTAL RETURN 1 TO 31 DECEMBER 2023 1YR 5YR (P.A.) 10YR (P.A.) SINCE 2004 (P.A.) 2 VHP VS S&P NZX REAL ESTATE INDEX 1,000 Vital 2.6% 4.7% 10.0% 10.5% Vital 900 S&P/NZX 50 Index S&P/NZX All Real Estate

34. Slide 34: Australian portfolio overview

    ~NZ$2.5bn Australian portfolio overview GEOGRAPHICALLY DISPERSED AU STRALIAN PORTFOLIO CONTINUES TO PERFORM WELL PRIVATE 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 CARE 79% of AUS portfolio value; 3% 85% of AUS

35. Slide 35: New Zealand portfolio overview

    ~NZ$1.0bn New Zealand portfolio overview KEY NEW ZEAL AND MARKE T PERFORMING STRONGLY 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 O WALE: 21.5 years AMBULATORY CARE 1% 8 AL HOSPIT 6 assets, multiple ten

36. Slide 36: Investment properties

    Investment properties AS AT 31 DECEMBER 2023 ~NZ$3.5BN PORTFOLIO OF HEALTHCARE REAL ESTATE COMPRISING 38 INVESTMENT PROPERTIES AND 2,800+ BEDS Western Australia (2) Queensland (4) New South Wales (8) Auckland (5) Abbotsford Private Hospital Baycrest Aged Care Darlington Aged Care Ascot Central Maria

37. Slide 37: Lease expiry profile

    Lease expiry profile LO W RISK EXPIRY PROFILE SUPPORTS SUSTAINABLE, PREDIC TABLE AND DEFENSIVE CASH 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 being divested and the a

38. Slide 38: Rent reviews undertaken in HY24

    Rent reviews undertaken in HY24 HIGH PERCENTAGE OF TOTAL RENT IS REVIEWED ANNUALLY WITH STRUC TURED 1 REVIEW MECHANISMS 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 3.7% completed for 72

39. Slide 39: Rent review profile

    Rent review profile Greater of Market or CPI (0%) No Review (3.4%) Lesser of CPI Stepped / Structured BREAKDO WN OF and 3% (1.3%) PORTFOLIO 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 1.1% O

40. Slide 40: Core portfolio metrics

    Core portfolio metrics 5 YEAR TRENDS HIGHLIGHT PORTFOLIO STRENGTH AND UNDERPIN LONGTERM PERFORMANCE O C C UPANC Y WAL E 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 2020 2021 2022 2023 15 2019 2

41. 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 Capitalisat

42. 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 ad

43. Slide 43: Thank you

    Thank you www.vhpt.co.nz Belmont Private

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