Vital Healthcare Property Trust · NZX:VHP
Vital Healthcare Property Trust — FY2022 Earnings Presentation
64 slides from Vital Healthcare Property Trust's earnings presentation, Aug 11, 2022
Slide 1: FY22 Annual Results Presentation
FY22 Annual Results Presentation 11 AU G U S T 2 0 2 2
Slide 2: Contents
Contents Overview of Vital 3 Presenters FY22 highlights 4 Financial results and capital management 12 Aaron Hockly Portfolio and acquisitions 17 Fund Manager 5 largest assets and asset groupings 22 Developments28 Michael Groth Chief Financial Officer Future focus 33 Appendices38 Richard Roos Acquisi
Slide 3: Overview of Vital
Overview of Vital1 VITAL IS THE ONLY SPECIALIST HEALTHCARE LANDLORD LISTED ON THE NZX VI TA L HE A LT HCA R E PR O PE R T Y T R UST (VI TA L) I S: The owner of a ~$3.3 billion healthcare 17.6 years ~$3.3bn property portfolio in New Zealand (28% of assets) and Australia (72%); WA L E 4 71 P R O P E R
Slide 4: FY22 highlights
FY22 highlights
Slide 5: Key events over FY22
Key events over FY22 2021 J U LY 2021 AU G U ST 2021 O C TO B ER 2021 NOVE MB E R 2021 P ractical completion of Wakefield F Y22 AFFO and distribution $315m debt refinance to extend A 27.8m raised via a Unit Purchase $ Hospital, Wellington Stage 1 for guidance announced of 11.8cpu debt capacity by A$
Slide 6: Key events over FY22 (cont'd)
Key events over FY22 (cont'd) 2022 FE BR UARY 2022 MARC H 2022 A P R I L 2022 M AY 2022 J U NE 2022 A cquisition of land for expansion P ractical completion of A$97m ppointment of Angela Bull A 200m in new equity raised $ Retirement of Andrew Evans of The Hills Clinic in Sydney for Epworth Eastern E
Slide 7: FY22 highlights – capital and Unit Holder returns
FY22 highlights – capital and Unit Holder returns TRANSAC T I ON S U N D E R TA K E N TO G R O W F U T U R E EARNING S AND S UP P O RT FUTURE P O RTFO LIO G RO W T H $379m A$665m equity raised1 debt refinanced 15.3% $397m increase in NTA per unit property transactions $382m2 acquisitions and $15m di
Slide 8: FY22 highlights – increased development focus
FY22 highlights – increased development focus ENHANC E D P OR T FOL IO ME T R IC S IN A L IG NME NT WITH STRATEGY 10 developments $100m underway, $215m spend of development and remaining with a further ~$1.8bn1 capital expenditure being actively considered works undertaken2 $148m $196m of developmen
Slide 9: FY22 highlights – sustainability
FY22 highlights – sustainability MATER I A L AC H I E VE M E NT O F A L L F Y22 TA R G E TS; FULL D E TAILS AVAIL ABLE IN V ITAL' S FY22 S USTAINABI L IT Y REPORT People Practice Places Continue to improve diversity on the Establish baseline environmental reporting Participate in third-party assessm
Slide 10: Short, medium and longer term progression
Short, medium and longer term progression1 P O R TFO LI O E N H A N C E ME NTS SU PPO R T TA R G E T OF G RO WING AFFO AND D ISTRIBUTIO NS BY 2–3% 2 P ER UN IT PER AN N UM TOTAL PRO PERT Y VA L U E WA L E AV E R AG E BUI L D I NG AG E N ET PROPERT Y IN COME (AN N U AL) ~ $0.57bn ~$1.93bn ~$3.34bn Da
Slide 11: Short, medium and longer term progression
Short, medium and longer term progression1 BAL ANC E S H E E T ST R E NG TH E NE D NTA PER UNIT B A L A N CE S H E E T G E A R I NG AV E R AG E D E BT M AT UR I T Y 42.3% 35.3% 30.0% 3.8 years 2.2 years 3.9 years $0.98 $2.31 $3.34 2012 2019 2022 2012 2019 2022 2012 2019 2022 No debt expiring Signifi
Slide 12: Financial results and capital management
Financial results and capital management
Slide 13: Financial performance
Financial performance P RO P ERT Y E A R N I N GS G R O W TH HAS FAC IL ITATE D AFFO G RO WTH ($) (%) FY22 FY21 C HA N GE C HA N GE Contribution from structured Net property income 123,018 109,663 13,355 12.2 rent reviews, acquisitions and Expenses ex. finance (37,518) (30,915) (6,603) (21.4) develo
Slide 14: Net property income
Net property income NP I G R O W T H (E XC L F X) INC R E ASE D F R O M AC Q UIS ITIO NS, D EV ELO PM ENTS AND RENT REV IEWS Acquisitions – income from late FY21 N E T P R O P ER T Y IN C O M E B R ID GE ($M) +12.2% growth (incl FX) / +12.8% (excl FX) Development income – rentalisation of capital ex
Slide 15: Balance sheet
Balance sheet STRENGT H E N E D BY SIG NIF IC A NT R E VA LUATIO N GAINS, NEW EQ UIT Y AND D EBT EX TENS IO N ($) (%) FY22 FY21 C HA N GE C HA N GE Increase due to: Investment properties 3,339,169 2,634,588 704,581 26.7 Development and capital works Other assets 60,665 27,972 32,693 116.9 expenditur
Slide 16: Debt duration
Debt duration INCREAS E D WE I GH T ED AV E R AG E D E BT D U R AT IO N AND AVAIL ABLE H EAD RO O M FO R UTILISATIO N B A NK FAC ILITIES 30 JUNE 2022 30 JUNE 2021 Debt to gross assets (Trust Deed)1 30.0% 35.0% Bank loan to value ratio - actual 2 32.1% 38.0% Bank loan to value ratio - covenant 55.0%
Slide 17: Portfolio and acquisitions
Portfolio and acquisitions
Slide 18: Portfolio update
Portfolio update ~$3.3BN I N V E ST E D I N 47 C O R E HE A LTH C A R E PR O P ERTIES WITH OV ER 2,800 BED S AND OV ER 135 S EPARAT E T EN AN TS Income G EO G RAP H IC D IV ERS IFIC ATION (BY VAL UE 1 ) CPI aligned leases support income growth $287m (excluding transaction costs) of acquisitions unde
Slide 19: Portfolio update (cont'd)
Portfolio update (cont'd) Diversification TENANT D IV ERS IFIC ATIO N % OF R ENT Largest single tenant exposure reduced largely through Aurora Healthcare 19% 22% 19% acquisitions and disposals from Healthe Care Surgical 16% ~50% two years ago to <20% Epworth15% Evolution Healthcare 9% Vital has a di
Slide 20: Recent acquisitions
Recent acquisitions Meadowbrook Queensland A development approval was lodged in March 2022 for 18,347 square metres of GFA for both public and private health services to support the growing catchment. Logan Hospital is undergoing a A$540 million expansion to deliver 688 beds by 2023. The public heal
Slide 21: Recent acquisitions (cont'd)
Recent acquisitions (cont'd) 80 Ascot Ave Mt Eliza In May 2022, Vital acquired a former 60-bed aged care Auckland, NZ Mornington facility ~7kms from Frankston for ~A$12m (including transaction Peninsula, VIC costs). A process is underway to redevelop this facility. In late June, Vital acquired 3,415
Slide 22: 5 largest assets and asset groupings
5 largest assets and asset groupings
Slide 23: Epworth Eastern Precinct, Melbourne, VIC
Epworth Eastern Precinct, Melbourne, VIC Epworth Eastern Hospital campus, 17-23 A$482m VA LU E Nelson Rd (development land), Ekera Medical Centre and 120 Thames St ASS E TS 270 ~15,000sqm ~35,000sqm PAT I E N T B E D S L AND AREA NL A 50m 16.0% 1999 P R OXI M I T Y TO % O F VI TAL' S YE AR ACQU IR E
Slide 24: Lingard Private Hospital Precinct, Newcastle, NSW
Lingard Private Hospital Precinct, Newcastle, NSW A$256m Lingard Private Hospital, Lingard Day Centre and 27 Hopkins VA LU E Street (development land) ASS E TS 140 ~15,000sqm 11,500sqm PAT I E N T B E D S L AND AREA NL A 3.6km 8.5% 2010 P R OXI M I T Y TO % O F VI TAL' S YE AR ACQU IR E D P U B L I
Slide 25: Ascot Hospital Precinct, Auckland, NZ
Ascot Hospital Precinct, Auckland, NZ Ascot Hospital, Ascot Central, $209m VA LU E 80 Ascot Ave (development land) and Ascot Carpark ASS E TS 88 ~40,000sqm ~16,000sqm PAT I E N T B E D S L AND AREA NL A 5.6km 6.3% 1997 P R OXI M I T Y TO % O F VI TAL' S YE AR ACQU IR E D P U B L I C HO S P I TAL PO
Slide 26: Belmont Private Hospital, Brisbane, QLD
Belmont Private Hospital, Brisbane, QLD A$146m VA LU E Belmont Private Hospital ASS E TS 150 ~43,000sqm ~8,700sqm PAT I E N T B E D S L AND AREA NL A 11.0km 4.8% 2010 P R OXI M I T Y TO % O F VI TAL' S YE AR ACQU IR E D P U B L I C HO S P I TAL PO RT FO LI O BY V ITAL A$22.6m expansion underway VITA
Slide 27: Wakefield Hospital, Wellington, NZ
Wakefield Hospital, Wellington, NZ $130m VA LU E Wakefield Hospital ASS E TS 68 ~20,000sqm 14,500sqm PAT I E N T B E D S L AND AREA NL A 850m 3.9% 2017 P R OXI M I T Y TO % O F VI TAL' S YE AR ACQU IR E D P U B L I C HO S P I TAL PO RT FO LI O BY V ITAL 14,500sqm of NLA anticipated on completion of
Slide 28: Developments
Developments
Slide 29: Development strategy and value-add focus
Development strategy and value-add F OCUS Development land has been TAR GE T I N G 10–15% O F T H E PO R T F O L IO (BY VA LUE) TO BE UND ER D EV ELO PM ENT acquired in key locations in New Zealand and Australia; planning is being progressed Developments are key for: PIPEL IN E $293m of committed de
Slide 30: Development case study - Epworth Eastern Precinct
Development case study - Epworth Eastern Precinct NO R THWE ST H AS A LO NG STA ND ING PA R TNE R SHIP WITH EP WO RTH H EALTH C ARE, H ELP ING V ITAL D EVELOP T HIS PRECIN C T OVER 20 Y EARS Having identified the opportunity within the Box Hill Future growth has been provisioned for Health and Educa
Slide 31: Development case study - Grace Hospital
Development case study - Grace Hospital IN L ATE 2020 V I TA L A NNO U NC E D T H AT IT HA D AC Q UIRED G RAC E H O S P ITAL As part of the acquisition Vital and the hospital operator (a joint venture between Evolution Healthcare and Southern Cross) $31.7m have been undertaking design and project va
Slide 32: Update on new and proposed developments
Update on new and proposed developments Coomera Ormiston Woolloongabba B R I SBANE, Q LD SOUT H AUC KL AND, NZ SOUT H BRI SBANE, QLD Stage 1 Medical Office Building Early works have commenced on site Development Application lodged in Development Application lodged to expand Ormiston Hospital. Leasin
Slide 33: Future focus
Ehara tāku toa I te toa takitahi, engari he toa takitini. My strength is not as an individual, but as a collective. Whakataukī Māori proverb Future focus
Slide 34: Sustainability initiatives
Sustainability initiatives Healthy planet Thriving partners GR E E N STAR PERF ORM AN C E H E ALT H AN D W EL L B EI N G T EN A N T EN GAGEM EN T O P T I MI SI NG SPACE S F O R Explore opportunities for full Green Star Sustainable procurement, healthy A N D IN T ER AC T I O N PAT I E NT W E LLNE SS
Slide 35: Sustainability initiatives (Cont'd)
Sustainability initiatives (Cont'd) Inclusive company Strong communities LEA R NING AND DEVELOPME N T I N DI G E N OU S W O R KGR O UP KEYSTO N E T R UST CHA R I TA B LE G I VI NG A ND Continue personalised learning and AN D RAP I N I T I AT IV E Three year Key Scholarship Partner CO MMUNI T Y I NVO
Slide 36: Outlook and guidance
Outlook and guidance C ONTINU E D DE LI V E RY A ND F O C U S O N E A R NINGS G RO WTH FY23 distribution guidance of 9.75 cpu; Significant development pipeline Health care assets (businesses 1.3% above FY22 to provide a projected and real property) remain in high $293m committed 5 year CAGR of 2.2%
Slide 37: Why invest in Vital
Why invest in Vital VITAL IS T H E ON LY S PE C IA L IST NZ X-L IST E D O W N ER O F H EALTH C ARE P RO P ERT Y DEFENS I VE S E C TOR H IG H D E MA ND H IG H Q UALIT Y EARNING S G RO W T H DEVELOPMEN T UPSIDE P O RTFO LIO Private healthcare is typically Ageing demographics and Targeting 2–3% AFFO $2
Slide 38: Appendices
Appendices
Slide 39: Acquisitions and developments detail
Acquisitions and developments detail
Slide 40: Committed developments – Australia and New Zealand
Committed developments – Australia and New Zealand DEVELOPM E N TS E N H A NC E E A R NING S G R O W T H AND IM P ROV E ASS E T Q UALIT Y ALL VALUES SHOWN IN $M DESCRIPTION OF WORKS DEVELOPMENT SPEND COST TO FORECAST FORECAST STATUS COST TO DATE COMPLETE NET RETURN COMPLETION DATE Abbotsford Private
Slide 41: Acquisition of Hutt Valley Health Hub, Wellington, NZ
Acquisition of Hutt Valley Health Hub, Wellington, NZ VITAL ACQUIRED A PREMIUM CO-LOCATED AMBULATORY CARE FACILITY TO COMPLEMENT EXISTING INVESTMENTS ACQ UI S I T I ON S UM MA RY $46.5m ~4.0% ~3,300sqm acquisition price initial yield net lettable area Feb 2022 ~14.2 years 7 tenants settlement WALE f
Slide 42: Acquisition of The Tennyson Centre, Adelaide, SA
Acquisition of The Tennyson Centre, Adelaide, SA VITAL AC QUI R E D ON E O F A D E L A ID E’S L E A D ING “C ANC ER C ENTRES O F EXC ELLENC E” ACQUISI T I ON S U M M A RY ~A$93m1 4.8% 12,700sqm acquisition price Initial yield site area 6,568sqm 3.5%–4% Oct 2021 net lettable area fixed annual rent re
Slide 43: Acquisition of land to expand The Hills Clinic, Sydney, NSW
Acquisition of land to expand The Hills Clinic, Sydney, NSW VITAL AC QUI R E D A ST R AT E G IC L A ND H O L D ING A DJ O INING EX ISTING P REM IUM ASS E T FO R FAC ILIT Y E XPAN SION ACQUISI T I ON S UM M A RY A$50m Feb 2022 MCC acquisition and estimated settlement development costs AUS LAN D PL 4,
Slide 44: Acquisition of multi-stage development site in South West Sydney
Acquisition of multi-stage development site in South West Sydney VITAL ACQUIRED A PRE-COMMIT TED GENESIS CARE CANCER CENTRE AND MULTI STAGE DEVELOPMENT SITE IN SYDNEY GRO WTH CATCHMENT STAGE 1 – FU N D-T H RO U G H D E V E LO PME NT OV E RV IEW A$52m 1 ~4.0% 2 Feb 2022 acquisition price & initial yi
Slide 45: Acquisition of Kawarau Park Health Precinct, Queenstown
Acquisition of Kawarau Park Health Precinct, Queenstown T E N A N TS FAV OU RAB L E D EM O GR A P HIC S Arvida Retirement and Aged Care Facility A newly developed health precinct The hospital is the only private hospital (under construction) comprising six tenanted buildings in Queenstown and Centra
Slide 46: Acquisition of 68 Saint Asaph St, Christchurch
Acquisition of 68 Saint Asaph St, Christchurch T E N A N TS AC QU I S I T I ON Hospital and related Public Hospital Public outpatient Manawa Building Existing tenants include a Canterbury Acquisition price of $50.7m clinic District Health Board (CDHB) maternity (excludes transaction costs and care f
Slide 47: Acquisition and expansion of Endoscopy Auckland
Acquisition and expansion of Endoscopy Auckland PROPERT Y AG R E E D DE VE LO PME NT Vital has acquired land and Terms have been agreed to buildings at 148 Gillies Avenue and utilise the vacant land at 22 Newmarket 22–24 Kipling Avenue, Epsom.1 Kipling Ave and develop a new day surgery and endoscopy
Slide 48: Expansion of Ormiston Hospital, Auckland
Expansion of Ormiston Hospital, Auckland PRO P ERT Y Artist’s impression showing existing building on left and proposed extension set back on the right. Vital has agreed terms for a ~$40m ~$40m expansion of its existing development costs1 asset, Ormiston Hospital. T ENANTS The property is leased to
Slide 49: Additional portfolio information
Additional portfolio information
Slide 50: Investment properties
Investment properties1 AS AT 30 JUNE 2022 ~$3.3BN P OR T FOLI O O F H E A LTH C A R E R E A L E STATE C O M P RIS ING 47 INV ESTM ENT P RO P ERTIES AND 2,800+ BEDS Vital also owns strategic land holdings for future development valued at ~$196m Auckland (6) Apollo Health and Wellness Centre Western A
Slide 51: Australian portfolio overview
~$2.4bn Australian portfolio overview G EO GR A P H I C A LLY D ISPE R SE D AU ST R A L IA N PO R TFO LIO C O NTINUES TO P ERFO RM WELL PRIVAT E HOSPITALS – AU ST RALIA S UB S E C TO R D IV E R SIT Y (BY VA LU E) 17 hospitals (acute and specialty – mental health, rehabilitation) Four hospital operat
Slide 52: New Zealand portfolio overview
~$0.9bn New Zealand portfolio overview K EY NE W Z E A L AN D M A R K E T PE R F O R MING STR ONG LY PRIVATE HOSPITALS – NEW ZEALAND S UB S E C TO R D IV E R SIT Y (BY VA LU E) 9 hospitals (all acute) 6 hospital operators A M B U L ATO RY CARE 75% of NZ portfolio value; 75% of NZ rent 25% WALE: 21.6
Slide 53: Lease expiry profile
Lease expiry profile LO W RIS K E XP I RY P R O F IL E SU PPO R TS SU STA INA BLE, P RED IC TABLE AND D EFENS IV E C AS H FLO WS Lease expiries in FY23 primarily reflect smaller tenancies at multi-tenant properties 10-year average annual lease expiry of only 1.7% (as % of total portfolio income) 10%
Slide 54: Rent reviews
Rent reviews HIG H P E R C E N TAGE O F TOTA L R E NT IS R E V IE W E D ANNUALLY WITH STRUC TURED 1 REV IEW M EC H ANISM S Rent reviews – FY22 (“LIK E-F OR-LI KE” E XC LU D E S D E V E LO PME NTS, AC Q UIS ITIO NS AND D IS P O SALS) Rent reviews have Jun-21 Rent p.a. Jun-22 Rent p.a. Increase Annual
Slide 55: Core portfolio metrics
Core portfolio metrics 5 Y EAR T R E N D S H I GH L IG H T PO R TF O L IO STR E NG TH AND UND ERP IN LO NG-TERM P ERFO RM ANC E O C C UPANC Y WAL E 100% 19 18.7 99.3 99.4 99.4 99.2 18.2 18.1 18.1 99% 98.8 18 17.6 98% 17 97% 16 96% Long-term track record of maintaining 95% 15 ~99% occupancy 2018 2019
Slide 56: Additional financial information
Additional financial information
Slide 57: Adjusted funds from operations (AFFO)
Adjusted funds from operations (AFFO) CO NS ERVAT I VE PAY-O U T R ATIO FY22 F Y21 ($) CHA NG E (%) CHA NG E Operating profit before tax and other income 1 56,517 51,064 5,453 10.7 Add/(deduct): Current tax expense (8,280) (7,858) (422) (5.4) Incentive fee 15,914 12,402 3,512 28.3 Current tax on tra
Slide 58: Interest rate hedging profile
Interest rate hedging profile CO ST O F D E BT W E LL H E D G E D, MA NAG ING R ISK RATE S 30 JU N E 30 J UN E H ED G ING M ATURIT Y P RO FILE ($A) 2022 2021 450 3.00% Weighted average cost of debt1 3.73% 3.32% 400 "Weighted average fixed rate 2.89% 2.94% 2.50% (excl line and margin)" 350 Weighted a
Slide 59: Net tangible assets (NTA)
Net tangible assets (NTA) REVALUAT I ON GA I N S SU PPO R T E D STR O NG NTA G RO WTH P ER UNIT NTA P ER UNIT BRIDG E Revaluation gain of $244m; 9.3% increase from June 2021 $3.40 $0.07 $3.34 ~77% of gain from Australian $3.30 $0.06 $0.02 ($0.02) $3.20 $0.32 portfolio and ~23% from $3.10 New Zealand
Slide 60: Movement in investment property
Movement in investment property WELL -LEAS E D H E A LT H C A R E ASSE TS C O NT INU E TO EX P ERIENC E C AP RATE C O M P RESS IO N I N VE STM ENT PROPERT Y B RI DG E (FY22) (N Z MI L L I O N S) K EY P OIN TS $3,500 244 (13) 75 3,339 Continued activation of strong development 298 100 pipeline, contr
Slide 61: Comparative returns
Comparative returns LO NG-T E R M OU T P E R F O R MA NC E BY V ITA L VS B E N C H M ARK O N A TOTAL RE TURN 1 BAS IS TOTAL RETURN 1 TO 30 JUNE 2022 1YR 5YR (P.A.) 10YR (P.A.) SINCE 2004 V H P VS S&P NZ X REAL ESTAT E IN DEX (%) (%) (%) (P.A.) 2 (%) Vital -10.2 7.2 13.2 12.7 S&P/NZX All Real Estate
Slide 62: Glossary
Glossary AFFO Adjusted Funds From Operations is an alternate measure used for assessing distributable income. Essentially adjusts net profit after tax for all non-cash items (i.e. NDI) then makes adjustments for items such as maintenance capex and lease incentives paid. Cap Rate Capitalisation Rate.
Slide 63: 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 64: Thank you
Thank you www.vhpt.co.nz Artist's impression of development of GenesisCare, Campbelltown
Vital Healthcare Property Trust — FY2022 Earnings Presentation on 6ix